TB MC Qu. 23-108 (Algo) Valber Company is considering eliminating...

Valber Company is considering eliminating its Phone division. The company allocates fixed costs based on sales. If the Phone division is dropped, all of its variable costs are avoidable, and $151,000 of its fixed costs are avoidable. The impact on Valbers income from eliminating the Phone division is:

	Desktops	Laptops	Tablets	Phones
Sales	$ 359,000	$ 874,500	$ 697,000	$ 976,000
Variable costs	202,000	636,000	529,000	796,000
Contribution margin	157,000	238,500	168,000	180,000
Fixed costs	72,200	175,300	139,800	196,000
Net income (loss)	84,800	63,200	28,200	(16,000)

Multiple Choice

• $6,000 decrease

• $151,000 increase

• $151,000 decrease

• $16,000 increase

• $29,000 decrease