QUESTION 6 Beta Company has two divisions, Wizards and Wands, Beta is considering discontinuing Wands, due to the division's continuing operating losses, Beta's current income statement is presented below. If Wands is discontinued, all employees of the division will be laid off. General expenses are allocated based on sales dollars and are not directly related to individual product lines. Total Wizards Wands Sales $1,000,000 $800,000 $200,000 Variable manufacturing and selling expenses 500,000 350,000 150,000 Contribution Margin $ 500.000 $450,000 $50,000 Fixed Expenses: Direct (traceable) advertising 28,000 $ 12,000 $ 16,000 Product line managers' salaries 100,000 60,000 40,000 General expenses 90.000 67.500 22.500 Total fixed expenses $ 218.000 $139,500 $ 78.500 Net operating income (loss) $ 282,000 $310,500 ($28,500) $ The financial advantage (disadvantage) of discontinuing Wands is: O ($28,500) ($27,000) $ 6,000 $ 28,500