A Study Has Been Conducted to Determine If One of the Departments

question 75

Multiple Choice

A study has been conducted to determine if one of the departments in Barry Corporation should be discontinued. The contribution margin in the department is $60,000 per year. Fixed expenses charged to the department are $75,000 per year. It is estimated that $34,000 of these fixed expenses could be eliminated if the department is discontinued. These data indicate that if the department is discontinued, the company's overall net operating income would:

• A)decrease by $26,000 per year
• B)increase by $26,000 per year
• C)decrease by $15,000 per year
• D)increase by $15,000 per year

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Definitions:

Proposition

A declaration or affirmation that reflects a viewpoint or evaluation.

Sentence

A collection of words complete by nature, usually having a subject and a verb, used to make a statement, ask a question, express surprise, or give an order.

Equivalent

The same in terms of importance, utility, or definition.

Property

A characteristic or attribute that something possesses, often used to differentiate it from other things.