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The following information relates to next year's projected operating results of the Housewares Department of The Merchandising Store: Contribution margin $ 225,000 Total fixed expenses
The following information relates to next year's projected operating results of the Housewares Department of The Merchandising Store: Contribution margin $ 225,000 Total fixed expenses 350,000 Net operating loss $ (125,000) If the Housewares Department is eliminated, $150,000 of the above fixed expenses are traceable to the Housewares Department and could be avoided. Which of the following statements is true for the Housewares Department The Housewares Department has a segment margin of $75,000 and should not be eliminated. O If the Housewares Department is eliminated, The Merchandising Store's net operating income will increase by $125,000. O The Housewares Department should not be eliminated because its contribution margin is positive. O The Housewares Department should be eliminated because it has a net operating loss
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