Jamison Health Care is trying to decide if it should eliminate its orthopedic care division. In the

Question:

Jamison Health Care is trying to decide if it should eliminate its orthopedic care division. In the last year, the orthopedic division had a contribution margin of $100,000 and allocated overhead costs of $200,000, of which $90,000 could be eliminated if the division is dropped. Should Jamison keep the division?

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...