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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, S169,000 of the
Valber Company is considering eliminating its phone division. The company allocates fixed costs based on sales. If the phone division is dropped, S169,000 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 $413,000 220,000 193,000 99,200 102,800 Laptops $928,500 654,000 274,500 193,300 81,200 Tablets $751,000 547, eee 204,800 157,800 46,200 Phones $994,000 814,000 180, eee 214, eee (34,880) Multiple Choice $24.000 decrease $169.000 increase $169,000 decrease $34,000 increase
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