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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 $159,000 of the
Valber Company is considering eliminating its phone division. The company allocates fixed costs based on sales. If the phone division is dropped $159,000 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 $383,000 210,000 173,000 B0,200 92,800 Laptops $898,500 644,000 254,500 183,300 71,200 Tablets $721,000 537,000 184,000 147, 800 36,200 Phones $984,000 804,000 180,000 204,000 (24,000)
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