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Question 14 Michelle has a dance studio and teaches ballroom dance, jazz...

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Accounting

Question 14

Michelle has a dance studio and teaches ballroom dance, jazz dance, and hip hop. However, the jazz dance program is not doing very well and she is considering discontinuing the jazz program. If she does discontinue jazz dance, she will be able to eliminate 40% of the fixed costs of jazz, but the other 60% will continue.

Ballroom Jazz Hip Hop Total .

Revenues $25,000 $15,000 $30,000 $70,000

Variable Costs $11,000 $ 8,000 $14,000 $33,000

Contribution Margin $14,000 $ 7,000 $16,000 $37,000

Fixed Costs $ 7,000 $14,000 $10,000 $31,000

Operating Income $ 7,000 -$7,000 $ 6,000 $ 6,000

What will be the change to income if Michelle discontinues her jazz class?

Should she discontinue Jazz dance classes?

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