Gata CoPlans to Discontinue a Department That Has a $48,000 Contribution

question 61

Multiple Choice

Gata Co.plans to discontinue a department that has a $48,000 contribution margin and $96,000 of fixed costs.Of these fixed costs,$42,000 cannot be avoided.What would be the effect of discontinuing the department on Gata's overall operating income?

• A) An increase of $6,000.
• B) A decrease of $6,000.
• C) An increase of $48,000.
• D) A decrease of $48,000.

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Definitions:

Self-Interest

The consideration of one's own advantages or benefits in making decisions or taking actions.

Gather

To collect or bring things together from different places or over a period.

Process Information

The act of receiving, interpreting, and understanding information, essential in decision-making and learning.

Self-Disclosing

The act of revealing personal information to others in order to foster trust and openness in relationships.