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 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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