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Division K Has a Contribution Margin of $100 000 and Fixed

Question 23

Multiple Choice

Division K has a contribution margin of $100 000 and fixed costs traceable to the division of $25 000 mean it is making a divisional margin of $75 000.However after the allocation of $90 000 of common costs,which would not be saved if the division were to be closed,it is making a loss of $15 000.Assuming all other factors are equal,if the division were closed the effect on the overall profit of the organisation would be:


A) an increase of $15 000
B) an increase of $75 000
C) a decrease of $90 000
D) a decrease of $75 000

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