Manor Company plans to discontinue a department that has a contribution margin of $25,000 and $50,000 in fixed costs.Of the fixed costs,$21,000 cannot be eliminated.The effect on the profit of Manor Company of discontinuing this department would be:
A) a decrease of $4,000.
B) an increase of $4,000.
C) a decrease of $25,000.
D) an increase of $25,000.

Question

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The Answer of Manor Company plans to discontinue a department that has a contribution margin of $25,000 and $50,000 in fixed costs.Of the fixed costs,$21,000 cannot be eliminated.The effect on the profit of Manor Company of discontinuing this department would be:
A) a decrease of $4,000.
B) an increase of $4,000.
C) a decrease of $25,000.
D) an increase of $25,000.

Manor Company Plans to Discontinue a Department That Has a Contribution