The following information relates to next year's projected operating results of the JCB Aluminum Division of WILDA Corporation:
Contribution margin $1500,000
Fixed expenses $1700,000
Net operating loss $(200,000)
If JCB Aluminum Division is dropped, $1,000,000 of the above fixed costs would be eliminated. What will be the effect on WILDA's CORP profit next year if jcb Aluminum Division is dropped instead of being kept?
Contribution margin 0 (since JCB Aluminum Division is dropped)
Fixed expenses ...
The solution evaluates the effect on the profits due to the proposed dropping a division.