A segment of a business reported a contribution margin of $36,000 and controllable fixed costs of $12,000.If the segment had been eliminated,the company-wide net income would have been
A) $12,000 higher.
B) $24,000 lower.
C) $36,000 lower.
D) $24,000 higher.

Question

Quizplus · Accepted Answer

If the segment is eliminated, the contribution margin of $36,000 would be lost, but the controllable fixed costs of $12,000 would also be saved. Therefore, the net effect on the company-wide net income would be a decrease of $24,000 ($36,000 - $12,000).

A Segment of a Business Reported a Contribution Margin of $36,000