Carla Vista Corporation is considering a eliminating a department that has incurred losses over the past several years. The department has a contribution margin of $33000 per year. The fixed costs charged to the department total $39000. $17000 of the fixed costs is avoidable. If the department is eliminated, what would be the effect on the corporation's operating income? O $39000 decrease O $16000 decrease O $22000 increase O $17000 increase

Principles of Accounting Volume 2
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ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 12MC: Youngstown Construction plans to discontinue its rooting segment. Last year, this segment generated...
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Carla Vista Corporation is considering a eliminating a department that has incurred losses over the past several years. The department
has a contribution margin of $33000 per year. The fixed costs charged to the department total $39000. $17000 of the fixed costs is
avoidable. If the department is eliminated, what would be the effect on the corporation's operating income?
O $39000 decrease
O $16000 decrease
O $22000 increase
O $17000 increase
Transcribed Image Text:Carla Vista Corporation is considering a eliminating a department that has incurred losses over the past several years. The department has a contribution margin of $33000 per year. The fixed costs charged to the department total $39000. $17000 of the fixed costs is avoidable. If the department is eliminated, what would be the effect on the corporation's operating income? O $39000 decrease O $16000 decrease O $22000 increase O $17000 increase
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