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

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

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