A Study Has Been Conducted to Determine If One of the Departments

Multiple Choice

A study has been conducted to determine if one of the departments in Barry Corporation should be discontinued. The contribution margin in the department is $60,000 per year. Fixed expenses charged to the department are $75,000 per year. It is estimated that $34,000 of these fixed expenses could be eliminated if the department is discontinued. These data indicate that if the department is discontinued, the company's overall net operating income would:

A) decrease by $26,000 per year
B) increase by $26,000 per year
C) decrease by $15,000 per year
D) increase by $15,000 per year