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Valber Company is considering eliminating its phone division. The company allocates fixed costs based on sales. If the phone division is dropped, S161,000 of the
Valber Company is considering eliminating its phone division. The company allocates fixed costs based on sales. If the phone division is dropped, S161,000 of the fixed costs allocated to that division could be eliminated. The impact on Valber's operating income from eliminating the phone division would be Sales Variable costs Contribution margin Fixed costs Net income (loss) Desktops Laptops Tablets Phones $389,000 $984,500 $727,000 $986,000 212,000 646,000 539, eee 806,000 177,000 258,500 188,000 180,000 82,200 185,300 149,800 206,000 94,800 73,280 38,200 (26,000)
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