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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? O $30000 decrease O $12000 decrease O $14000 increase O $16000 increase

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? O $30000 decrease O $12000 decrease O $14000 increase O $16000 increase

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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? O $30000 decrease O $12000 decrease O $14000 increase O $16000 increase
Transcribed Image Text: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? O $30000 decrease O $12000 decrease O $14000 increase O $16000 increase
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