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 $26,000 and $74,000 in fixed costs. Of the fixed costs, $18,000 cannot be avoided. The effect of eliminating this department on Fabio's overall net operating income would be:

A.a decrease of $48,000.

B.an increase of $30,000.

C.an increase of $48,000.

D.a decrease of $30,000.

Fabio Corporation is considering eliminating a department that has a contribution margin of $26,000 and $74,000 in fixed costs. Of the fixed costs, $18,000 cannot be avoided. The effect of eliminating this department on Fabio's overall net operating income would be:

Explanation / Answer

D.a decrease of $30,000.

contribution margin of $26,000- $74,000 in fixed costs-fixed costs, $18,000 cannot be avoided=$30,000

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