Question
Bounce House Inc is considering dropping its water toy department due to continued net operating losses. Results for the most recent year for the water
Bounce House Inc is considering dropping its water toy department due to continued net operating losses. Results for the most recent year for the water toy department is shown below Description Sales (5,000 units) Variable expenses Contribution margin Fixed expenses Net operating loss Amount $75,000 $50,000 $25,000 40,000 ($15,000) the water toy department were discontinued, the company would still incur 512,000 per year of costs. The remainder of the fixed costs are avoidable The annual financial advantage (disadvantage) for the company from discontinuing the production and sales of the water department would be: A $3,000 disadvantage B. 53,000 advantage \$13,00 disadvantage 513,000 advantage
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