Roger Rabbit Enterprises Is Considering Whether to Discontinue a Division

question 22

Multiple Choice

Roger Rabbit Enterprises is considering whether to discontinue a division that generates a total contribution margin of $66,000 per year. Fixed manufacturing overhead allocated to this division is $50,000, of which 19,000 is unavoidable. If Roger Rabbit Enterprises were to eliminate this division, the effect on the company's operating income would be a (n)

• A)increase in total operating income of $35,000.
• B)decrease in total operating income of $35,000.
• C)increase in total operating income of $47,000.
• D)decrease in total operating income of $47,000.

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Definitions:

Refreezing Phase

The final stage in the change process where new behaviors become solidified into the organization's culture, ensuring the change is sustained over time.

Declaring Victory

The act of officially announcing or acknowledging success in a specific endeavor, project, or competition.

Forgetting

The failure to remember information, experiences, or how to perform tasks over time.

Abandoning

The act of giving up or discontinuing a process, project, or pursuit without intention to return.