The internal financial statements of Vera Incorporated show that their beaded purses incurred an operating loss in the most recent year. There were 25,000 purses sold in that year. Selected financial information about the purse line follows.

Total sales revenue

$195,000

Variable costs

$95,000

Contribution margin

$100,000

Fixed cost

$101,000

Net operating loss

$(1,000)

If the line of purses were to be discontinued, the company would avoid $ 

$21,000 in fixed costs per year.

Answer rating: 100% (QA)

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