Fabri Corporation is considering eliminating a department that has an annual contribution margin of $38,000 and...
Fabri Corporation is considering eliminating a department that has an annual contribution margin of $38,000 and $76,000 in annual fixed costs. Of the fixed costs, $19,000 cannot be avoided. The annual financial advantage (disadvantage) for the company of eliminating this department would be: Multiple Choice $38,000 (519,000) o o 0 (538,000) Multiple Choice 0 $38,000 0 ($19,000) 0 ($38,000) 0 $19,000
Homework Answers
Avoidable fixed costs = $76,000 − $19,000 = $57,000
| Contribution margin | 38,000.00 |
| Avoidable fixed costs | - 57,000.00 |
| Segment margin | - 19,000.00 |
If the company eliminates this department it will get Financial Advantage of 19,000
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