A Study Has Been Conducted to Determine If One of the Departments

question 214

Multiple Choice

A study has been conducted to determine if one of the departments in Carry Corporation should be discontinued. The contribution margin in the department is $80,000 per year. Fixed expenses charged to the department are $95,000 per year. It is estimated that $50,000 of these fixed expenses could be eliminated if the department is discontinued. These data indicate that if the department is discontinued, the yearly financial advantage (disadvantage) for the company would be:

• A) ($15,000)
• B) $15,000
• C) ($30,000)
• D) $30,000

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Definitions:

Competition Exists

A state where multiple entities offer similar goods or services in the marketplace, striving to achieve greater customer satisfaction and market share.

Unequal Bargaining Power

A scenario in negotiations where one party has significantly more influence or resources than the other, leading to potentially unfair outcomes.

Human Resources School

An approach or perspective in organizational management focusing on employee welfare, motivation, and efficiency as key factors in achieving organizational success.

Labor Problem

Issues and disputes arising in the workplace, including matters of pay, working hours, conditions, safety, and disputes between employees and employers.