Dropping a Division
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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?
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Solution Summary
The solution evaluates the effect on the profits due to the proposed dropping a division.
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Contribution margin 0 (since JCB Aluminum Division is dropped)
Fixed expenses ...
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