Rabbitt Corporation Is Considering Whether to Discontinue a Division That

question 142

Multiple Choice

Rabbitt Corporation is considering whether to discontinue a division that generates a total contribution margin of $40,000 per year.Fixed manufacturing overhead allocated to this division is $60,000,of which 12,000 is unavoidable.If Rabbitt Corporation were to eliminate this division,the effect on the company's operating income would be a(n) :

• A)increase in total operating income of $8,000.
• B)decrease in total operating income of $8,000.
• C)increase in total operating income of $28,000.
• D)decrease in total operating income of $28,000.

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An original model or initial version of something from which other forms are copied or developed.

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