Channing Company is a large internet retailer with fulfillment warehouses in numerous locations throughout the U.S.One of Channing's warehouses has been showing losses over several quarters,and management is considering closing the warehouse.If the warehouse is closed,only the warehouse manager will be retained by Channing.The warehouse manager's annual salary is $65,000.The warehouse fixtures and equipment have no resale value.Following is the most recent income statement for the warehouse:

What would be the impact on Channing's overall operating income if the warehouse is eliminated?
A) Increase by $18,600 per year.
B) Decrease by $68,000 per year.
C) Decrease by $86,600 per year.
D) Increase by $46,400 per year.

Question

Channing Company is a large internet retailer with fulfillment warehouses in numerous locations throughout the U.S.One of Channing's warehouses has been showing losses over several quarters,and management is considering closing the warehouse.If the warehouse is closed,only the warehouse manager will be retained by Channing.The warehouse manager's annual salary is $65,000.The warehouse fixtures and equipment have no resale value.Following is the most recent income statement for the warehouse:
 
 What would be the impact on Channing's overall operating income if the warehouse is eliminated? 
A) Increase by $18,600 per year. 
B) Decrease by $68,000 per year. 
C) Decrease by $86,600 per year. 
D) Increase by $46,400 per year.

Quizplus · Accepted Answer

The Answer of Channing Company is a large internet retailer with fulfillment warehouses in numerous locations throughout the U.S.One of Channing's warehouses has been showing losses over several quarters,and management is considering closing the warehouse.If the warehouse is closed,only the warehouse manager will be retained by Channing.The warehouse manager's annual salary is $65,000.The warehouse fixtures and equipment have no resale value.Following is the most recent income statement for the warehouse:
 
 What would be the impact on Channing's overall operating income if the warehouse is eliminated? 
A) Increase by $18,600 per year. 
B) Decrease by $68,000 per year. 
C) Decrease by $86,600 per year. 
D) Increase by $46,400 per year.

Channing Company Is a Large Internet Retailer with Fulfillment Warehouses