Manor Company Plans to Discontinue a Department That Has a Contribution

question 144

Multiple Choice

Manor Company plans to discontinue a department that has a contribution margin of $24,000 and $48,000 in fixed costs.Of the fixed costs,$21,000 cannot be avoided.The effect of this discontinuance on Manor's overall net operating income would be a(an) :

• A) decrease of $3,000.
• B) increase of $3,000.
• C) decrease of $24,000.
• D) increase of $24,000.

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Definitions:

Behavioral

Pertaining to the actions or reactions of persons or organisms in response to external or internal stimuli.

McGregor

Refers to Douglas McGregor's Theory X and Theory Y, which are concepts that describe two contrasting models of workforce motivation and management.

Theory Y

A theory of management that assumes employees are self-motivated, seek responsibility, and are creative problem solvers.

Relations-motivated

Having a primary focus or driving force centered around developing and maintaining interpersonal relationships.