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Trampoline Inc is considering dropping its water toy department due to continued net operating losses. Results for the most recent year for the water toy
Trampoline Inc is considering dropping its water toy department due to continued net operating losses. Results for the most recent year for the water toy department is shown below: Description Sales (6,000 units) Variable expenses Contribution margin Fixed expenses Net operating loss Amount $108,000 $72,000 $36,000 $60,000 ($24,000) If the water toy department were discontinued, the company would still incur $20,000 per year of fixed costs. The remainder of the fixed costs an avoidable. The annual financial advantage (disadvantage) for the company from discontinuing the production and sales of the water toy department would A $16,000 disadvantage B. $16,000 advantage $4,000 disadvantage D. $4,000 advantage
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