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 $29,000 and $71,000 in fixed costs. Of the fixed costs, $13,500 cannot be avoided. The effect of eliminating this department on Fabio's overall net operating income would be:

an increase of $42,000.

an increase of $28,500.

a decrease of $42,000.

a decrease of $28,500.

Fabio Corporation is considering eliminating a department that has a contribution margin of $29,000 and $71,000 in fixed costs. Of the fixed costs, $13,500 cannot be avoided. The effect of eliminating this department on Fabio's overall net operating income would be:

Explanation / Answer

Increase of 28500

Solution : (29000) + 71000 +( 13500) = $ 28500

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