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Volber Company is considering eliminating its phone division. The company allocates fixed costs based on sales. If the phone division is dropped, $151,000 of the
Volber Company is considering eliminating its phone division. The company allocates fixed costs based on sales. If the phone division is dropped, $151,000 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 (lon) Desktops $359,000 202,000 157,000 72,200 84,800 Laptops $874,500 636.000 238,500 175,300 63,200 Tablets $697,000 529,000 168,000 139,800 28,200 Phones $976,000 796,000 180,000 196,000 (16,000) Multiple Choice $6.000 decrease $151,000 increase $151,000 decrease $16,000 increase $29,000 decrease
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