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Carmichael Corporation is a conglomerate with five divisions, including a Motorcycle Division. In recent months, profits in the Motorcycle Division have been slightly negative, and
Carmichael Corporation is a conglomerate with five divisions, including a Motorcycle Division. In recent months, profits in the Motorcycle Division have been slightly negative, and management is evaluating whether to drop it. Management commissioned a study to determine if it should be discontinued. The contribution margin in the department is 590,000 per year. Fixed expenses charged to the department are 595.00 per year. It is estimated that $50,000 of these fixed expenses could be eliminated if the Motorcycle Department is discontinued. These data indicate that if the Department is discontinued, the yearly financial advantage (disadvantage) for the company would be: (540,000) 55.000 $40.000 (55,000)
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