Assume Cadiz Company is deciding if it should discontinue its coffee grinder business. Assume below is the
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Question:
Assume Cadiz Company is deciding if it should discontinue its coffee grinder business. Assume below is the income statement from last year for the coffee grinder business segment: Sales $3,000,000, Variable expenses $1,200,000, Contribution margin $1,800,000, Fixed expenses $2,000,000. If the coffee grinder business was discontinued, Cadiz could avoid $1,300,000 per year in fixed costs. The remainder of the fixed costs are not avoidable. The annual financial advantage (disadvantage) for the company discontinuing the the coffee grinder business would be:
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