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23 January, 14:26

Fabri Corporation is considering eliminating a department that has an annual contribution margin of $35,000 and $70,000 in annual fixed costs. Of the fixed costs, $25,000 cannot be avoided. The annual financial advantage (disadvantage) for the company of eliminating this department would be:

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  1. 23 January, 15:21
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    if eliminate department would be saving $10000

    Explanation:

    given data

    annual contribution margin = $35,000

    annual fixed costs = $70,000

    solution

    we it is Continues than we realize loss that is here

    Loss = contribution margin - fixed costs ... 1

    Loss = $35000 - $70000

    Loss = $35000

    and when it is Eliminates fixed cost = 25000 it will occur loss of 25000

    so saving will be

    Savings = $35000 - $25000

    saving = $10000

    so if eliminate department would be saving $10000
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