Fabio Corporation is considering eliminating a department that has a contributio
ID: 2456736 • Letter: F
Question
Fabio Corporation is considering eliminating a department that has a contribution margin of $21,000 and $79,000 in fixed costs. Of the fixed costs, $25,500 cannot be avoided. The effect of eliminating this department on Fabio's overall net operating income would be:
a decrease of $58,000.
an increase of $58,000.
a decrease of $32,500.
an increase of $32,500.
Fabio Corporation is considering eliminating a department that has a contribution margin of $21,000 and $79,000 in fixed costs. Of the fixed costs, $25,500 cannot be avoided. The effect of eliminating this department on Fabio's overall net operating income would be:
Explanation / Answer
a decrease of $ 58000 ( 21000 - 79000).
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