Valber Company Is Considering Eliminating Its Phone Division A)$30,000 Increase
B)$150,000 Increase
C)$150,000 Decrease
D)$15,000 Increase
E)$30,000 Decrease

Valber Company is considering eliminating its phone division.The company allocates fixed costs based on sales.If the phone division is dropped,$150,000 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: $\begin{array}{lcrrl} & \text { Desktops } & \text { Laptops } & \text { Tablets } & \text { Phones } \\\text { Sales } & \$ 356,000 & \$ 871,500 & \$ 694,000 & \$ 975,000 \\\text { Variable costs } & 201,000 & 635,000 & 528,000 & 795,000\\\text { Contribution margin } & 155,000 & 236,500 & 166,000 & 180,000 \\\text { fixed coats} & 71,200 & 174,300 & 138,800 & 195,000\\\text {net income(loss} &83,800&62,200&27,200&(15,000) \end{array}$

A) $30,000 increase
B) $150,000 increase
C) $150,000 decrease
D) $15,000 increase
E) $30,000 decrease

Correct Answer:

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