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KEEP OR DROP A SEGMENT? Department A has a contribution margin of $650,000, fixed costs of $800,000, and a net operating loss of $150,000. Department
KEEP OR DROP A SEGMENT? Department A has a contribution margin of $650,000, fixed costs of $800,000, and a net operating loss of $150,000. Department B has a contribution margin of $2,200,000, fixed costs of $1,200,000 and a net operating income of $1,000,000. $450,000 of the fixed costs charged to Department A are allocated costs that will be absorbed by Department B if Department A is dropped. Elimination of Department A would result in a 15% decrease in sales of Department B. If Department A is dropped, what will be the net effect on net operating income for the company as a whole
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