Division B Earns a Contribution Margin of $200,000 and Has

question 8

Multiple Choice

Division B earns a contribution margin of $200,000 and has a divisional margin of $70,000.If Division B is closed,all of the direct divisional expenses and $110,000 of common expenses can be eliminated.What effect will closing the division have on the firm's operating income?

• A)Operating income will decrease by $40,000.
• B)Operating income will increase by $40,000.
• C)Operating income will decrease by $90,000.
• D)Operating income will increase by $90,000.

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