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Reynolds Inc. has three divisions, one of which has been underperforming its peers for the past several years. The underperforming division has sales of $480,000,
Reynolds Inc. has three divisions, one of which has been underperforming its peers for the past several years. The underperforming division has sales of $480,000, with variable costs of $350,000. Although fixed costs total $210,000 for the division, Reynolds anticipates that $95,000 of those costs will still remain even if the division is dropped. Reynolds should: Drop the division because total costs exceed sales. Keep the division because the contribution margin exceeds unavoidable fixed costs. O Drop the division because the avoidable fixed costs exceeds the contribution margin. O Keep the division because the contribution margin exceeds the avoidable fixed costs
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