The following information relates to next year's projected operating results of the Consumer Division of Xampa Corporation:
If the Consumer Division is eliminated,$1,600,000 of the above fixed expenses could be avoided.What will be the effect on Xampa's profit next year if Consumer Division is eliminated?
A)$300,000 decrease
B)$300,000 increase
C)$200,000 decrease
D)$200,000 increase

Question

Quizplus · Accepted Answer

Because the segment margin is a positive $200,000,profit would decrease by $200,000 if the Consumer Division is eliminated.

The Following Information Relates to Next Year's Projected Operating Results