Fabio Corporation is considering eliminating a department that has a contributio

Question

Fabio Corporation is considering eliminating a department that has a contribution margin of $23,000 and $77,000 in fixed costs. Of the fixed costs, $22,500 cannot be avoided. The effect of eliminating this department on Fabio's overall net operating income would be:

a decrease of $54,000.

an increase of $54,000.

a decrease of $31,500.

an increase of $31,500.

Fabio Corporation is considering eliminating a department that has a contribution margin of $23,000 and $77,000 in fixed costs. Of the fixed costs, $22,500 cannot be avoided. The effect of eliminating this department on Fabio's overall net operating income would be:

Explanation / Answer

Solution-

a decrease of $31,500

Explanation-

Avoidable fixed costs = $77,000 - $22,500

Avoidable fixed costs = $54,500

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.