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Discontinuance

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Vanilli Company plans to discontinue a division that generates a total contribution margin of $20,000 per year. Fixed overhead associated with this division is $50,000, of which $5,000 cannot be eliminated. The effect of this discontinuance on Vanilli's operating income would be an increase of $______?

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Solution Summary

The solution determines the effect of discontinuance on Vanilli's operating income.

Solution provided by:
Gaurav Agarwal, MS
Education
  • BE, Bangalore University, India
  • MS, University of Wisconsin-Madison
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