Logan Corporation Is Considering a Eliminating a Department That Has

question 98

Multiple Choice

Logan Corporation is considering a eliminating a department that has incurred losses over the past several years.The department has a contribution margin of $32,000 per year.The fixed costs charged to the department total $37,000.$15,000 of the fixed costs is avoidable.If the department is eliminated, what would be the effect on the corporation's operating income?

• A)$17,000 decrease
• B)$37,000 decrease
• C)$15,000 increase
• D)$22,000 increase

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