Valber Company is considering eliminating its phone division. The company allocates fixed costs based on...
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Accounting
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 Valbers operating income from eliminating the phone division would 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
)
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