Question
Ancient Company plans to discontinue a department that has a contribution margin of P60,000 and P100,000 in fixed costs. Of the fixed costs, P60,000 would
Ancient Company plans to discontinue a department that has a contribution margin of P60,000 and P100,000 in fixed costs. Of the fixed costs, P60,000 would still continue even if the department is closed. The effect of this discontinuance on Indian's overall net operating income would be
A. Zero effect
B. increase of P20,000
C. decrease of P20,000
D. increase of P40,000
Answer with solution and explanation.
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Financial Accounting Tools for Business Decision Making
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
9th edition
1-119-49356-3, 1119493633, 1119493560, 978-1119493631
