Louis and Lyla Inc. is considering whether to discontinue Department A. In the last quarter,...
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Louis and Lyla Inc. is considering whether to discontinue Department A. In the last quarter, Department A incurred an operating loss of $50,000. Its total fixed expenses for the quarter were $60,000. The company determined that 90 percent of the department's fixed expenses is the company's common fixed expense allocated to the department. Louis and Lyla Inc. should_______.
continue Department A because the net decrease in the company's segment margin is $10,000
continue Department A because the net decrease in the company's segment margin is $4,000
discontinue Department A because the net increase in the company's segment margin is $10,000
discontinue Department A because the net increase in the company's segment margin is $4,000
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