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Assume a retailing company has two departments Department A and Department B. The company's most recent contribution format income statement follows Total Department A Department
Assume a retailing company has two departments Department A and Department B. The company's most recent contribution format income statement follows Total Department A Department B Sales $ 800,000 $ 35 , $ 450,000 Variable expenses 320,000 120,000 200, eee Contribution margin 480,000 230,000 250,000 Fixed expenses 4 , 140,000 260,000 Net operating income (loss) $ 80,000 $ 90,000 $ (10,000) The company says that $110,000 of the fixed expenses being charged to Department Bare sunk costs or allocated costs that will continue the segment is discontinued. However, if Department is discontinued the sales in Department A will drop by 9% What is the financial advantage (disadvantage) of discontinuing Department B? Multiple Choice O $(136,000) O $(140,000) $(140,700) O $(120,700)
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