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Question 14 (4 points) Baker Corporation, a very profitable enterprise, is considering the elimination of its Service Department. An income statement provided by the corporate
Question 14 (4 points) Baker Corporation, a very profitable enterprise, is considering the elimination of its Service Department. An income statement provided by the corporate accountant indicates the Service Department generates a contribution margin of $70,000 each year, less allocated fixed costs of $160,000 each year, resulting in a net loss of $90,000 each year. Upon further review, it is determined that $100,000 of the $160,000 allocated fixed costs, In fact, cannot be avoided if the Service Department is eliminated (such costs would have to be absorbed by other departments if the Service Department was eliminated). Determine the net effect eliminating the Service Department would have on the corporation's overall net operating income. Will the companywide net operating income increase or decrease? By how much? Show your work for chance at partial credit
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