Manor Company Plans to Discontinue a Department That Has a Contribution

question 16

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.What would be the effect of discontinuing the department on Manor's overall operating income?

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

---

Definitions:

Identical

Exactly the same, or very similar in every detail.

Participatory Planning

Planning that includes the persons who will be affected by plans and/or those who will implement them.

Implementation

The process of executing a plan or policy so that a concept becomes an operational reality in a strategic manner.

Participatory Planning

A process that involves stakeholders in decision-making and planning activities to ensure that outcomes meet their needs.