Question: Delta Corp. has three divisions. Alpha and Bravo are profitable, while Charlie is losing money. Delta is considering discontinuing the Charlie division. Revenue and cost
Delta Corp. has three divisions. Alpha and Bravo are profitable, while Charlie is losing money. Delta is considering discontinuing the Charlie division. Revenue and cost information is shown below. Alpha Bravo Charlie Sales $186,000 $179,000 $99,000 revenue 77,000 51,000 63,000 Variable costs Fixed costs 78,000 94,000 45,000 If Charlie is discontinued, 53% of its fixed costs would be avoided, while the rest would be absorbed by the other two division. If Charlie is discontinued, net income will: -> increase. (enter 1 below) -> decrease (enter 2 below) -> remain the same (enter 3 below)
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