Question 5 (5 points) Listen Mobb Company plans to discontinue a division that generates a total contribution margin of $20,000 per year. Fixed overhead associated with this division is $50,000, of which $10,000 cannot be eliminated. If the division is discontinued, how would Mobb's operating income be affected? Have no effect Increase by $25,000 Decrease by $10,000 Increase by $20,000 Question 7 (5 points) Listen 10 In deciding whether to manufacture a part or buy it from an outside supplier, which of the following is an irrelevant cost? Fixed overhead that will be avoided if the part is purchased from an outside supplier Direct labor Variable overhead Fixed overhead that will continue even if the part is purchased from an outside supplier Question 10 (5 points) Listen The accountant for Milton, Inc. is preparing the budgets for operating department support service costs. Maintenance costs are allocated based on square feet, and cafeteria costs are allocated based on number of employees. The following data have been collected: Support Departments Operating Departments Maintenance Cafeteria Cutting Packaging Direct costs $50,000 $45,000 $275,000 $300,000 Number of employees 15 10 150 250 Square feet 1,500 3,500 4,000 If the direct method is used, maintenance costs allocated to the cafeteria will be 2,000 $10,000 SO $28,571 13 $15.909