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Mad Hatter plans to discontinue a department with a contribution margin of $24,000 and overhead...

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Accounting

  1. Mad Hatter plans to discontinue a department with a contribution margin of $24,000 and overhead of $48,000, of which $21,000 is allocated and cannot be eliminated. The effect of this discontinuance on Mad Hatters pretax profit would be a(n):
    1. Decrease of $3,000
    2. Increase of $3,000
    3. Decrease of $24,000
    4. Increase of $24,000

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