Brandy Company Is Deciding Whether or Not to Discontinue One

question 104

Multiple Choice

Brandy Company is deciding whether or not to discontinue one of its divisions.The division's contribution margin is $27,000 per year.The fixed costs charged to the division total $32,000,but $15,000 would be eliminated if the division is discontinued.If the division is eliminated,the overall operating income would

• A) Decrease by $9,000
• B) Decrease by $12,000
• C) Decrease by $15,000
• D) Increase by $27,000

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Definitions:

Invoice

A document issued by a seller to a buyer listing the goods or services provided, their prices, and the total amount due.

Enforceable

A legal term denoting that an agreement or contract is legally binding and can be upheld in court.

Statute of Frauds

A legal principle that requires certain types of contracts to be in writing and signed by all parties involved in order to be enforceable.

Oral Contract

A verbal agreement between parties that is legally binding, though not in written form.