Crane Corporation is considering a eliminating a department that has incurred losses over the past several years.
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Question:
Crane Corporation is considering a eliminating a department that has incurred losses over the past several years. The department has a contribution margin of $26000 per year. The fixed costs charged to the department total $30000. $14000 of the fixed costs is avoidable. If the department is eliminated, what would be the effect on the corporation's operating income?
a. $12000 decrease
b. $16000 increase
c. $14000 increase
d. $30000 decrease
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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