Valber Company is considering eliminating its Phone division. The company allocates fixed costs based on...
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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 its fixed costs are avoidable. If it eliminates its Phone division, Valbers total income will be:
Desktops
Laptops
Tablets
Phones
Sales
$ 356,000
$ 871,500
$ 694,000
$ 975,000
Variable costs
201,000
635,000
528,000
795,000
Contribution margin
155,000
236,500
166,000
180,000
Fixed costs
71,200
174,300
138,800
195,000
Net income (loss)
83,800
62,200
27,200
(15,000)
a. $158,200
b. $30,000
c. $128,200
d. $188,200
e. $407,500
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 its fixed costs are avoidable. If it eliminates its Phone division, Valber's total income will be
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