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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, $167,000 of
Valber Company is considering eliminating its phone division. The company allocates fixed costs based on sales. If the phone division is dropped, $167,000 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: Desktops Laptops Tablets Phones Sales $407,000 $922,500 $745,000 $992,000 Variable costs 218,000 652,000 545,000 812,000 Contribution margin 189,000 270,500 200,000 Fixed costs 88,200 180,000 191,300 155,800 212,000 Net income (loss) 100,800 79,200 44,200 (32,000)
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