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Tobler Tech is considering eliminating its desktop division. The company allocates common fixed costs evenly among the divisions. If the desktop division is dropped, none
Tobler Tech is considering eliminating its desktop division. The company allocates common fixed costs evenly among the divisions. If the desktop division is dropped, none of the fixed costs allocated to that division could be eliminated. The impact on Tobler's operating income from eliminating the desktop division would be: Sales Variable costs Contribution margin Common Fixed costs Net income (loss) Desktops $ 356,000 241,000 115,000 140,000 (25,000) Laptops $871,500 635,000 236,500 140,000 96,500 Tablets $694,000 528,000 166,000 140,000 26,000 Phones $975,000 695,000 280,000 140,000 140,000
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