Ron Jensen,the controller of Inca Industries,has prepared an analysis to help management determine whether one of Inca's departments should be eliminated.The department's contribution margin is $44,000.The fixed expenses charged to the department total $75,000.Of the fixed expenses,Jensen estimates that $36,000 of those expenses would be eliminated if the department were discontinued.Based on Jensen's analysis,if the department is eliminated,Inca's overall operating income would
A) Increase by $8,000 per year.
B) Decrease by $8,000 per year.
C) Decrease by $31,000 per year.
D) Decrease by $5,000 per year.
Correct Answer:
Verified
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