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A study has been conducted to determine if one of the departments in Carry Corporation should be discontinued.The contribution margin in the department is $80,000 per year.Fixed expenses charged to the department are $95,000 per year.It is estimated that $50,000 of these fixed expenses could be eliminated if the department is discontinued.These data indicate that if the department is discontinued,the yearly financial advantage (disadvantage)for the company would be:________.A) ($15,000)B) $15,000C) ($30,000)D) $30,000

Answer :

Answer:

C) ($30,000)

Explanation:

The contribution margin in the department is $80,000

Fixed expenses charged to the department are $95,000

$50,000 of these fixed expenses could be eliminated

So controllable contribution is $80,000 - $50,000 = $30,000.

This contribution will be lost if the department is discontinued.

Therefore,

The yearly financial disadvantage for the company would be $30,000