Ron Jensen, the Controller of Inca Industries, Has Prepared an Analysis

question 100

Multiple Choice

Ron Jensen, the controller of Inca Industries, has prepared an analysis to help management determine whether one of Inca's departments should be eliminated.The department's contribution margin is $44,000.The fixed expenses charged to the department total $75,000.Of the fixed expenses, Jensen estimates that $36,000 of those expenses would be eliminated if the department were discontinued.Based on Jensen's analysis, if the department is eliminated, Inca's overall operating income would

• A)increase by $8,000 per year.
• B)decrease by $8,000 per year.
• C)decrease by $31,000 per year.
• D)decrease by $5,000 per year.

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