Logan Corporation Is Considering a Eliminating a Department That Has

question 98

Multiple Choice

Logan Corporation is considering a eliminating a department that has incurred losses over the past several years.The department has a contribution margin of $32,000 per year.The fixed costs charged to the department total $37,000.$15,000 of the fixed costs is avoidable.If the department is eliminated, what would be the effect on the corporation's operating income?

• A)$17,000 decrease
• B)$37,000 decrease
• C)$15,000 increase
• D)$22,000 increase

---

Definitions:

IKEA

A multinational conglomerate that designs and sells ready-to-assemble furniture, kitchen appliances, and home accessories, among other goods and home services.

Neuromarketing

A field of marketing research that studies consumers' sensorimotor, cognitive, and affective response to marketing stimuli using neuroscience technology.

Shopping Bags

Carry bags provided by retailers or used by shoppers to hold and transport purchases, made from various materials including plastic, paper, or fabric.

Interviewing Employees

The process of asking potential hires questions to evaluate their suitability for a position within an organization.