Valber Company is considering eliminating its phone division. The company allocates fixed costs based on sales. If the phone division is dropped, $150,000 of the fixed costs allocated to that division could be eliminated. The impact on Valber's operating income from eliminating the phone division would be:
A) $30,000 increase
B) $150,000 increase
C) $150,000 decrease
D) $15,000 increase
E) $30,000 decrease

Question

Valber Company is considering eliminating its phone division. The company allocates fixed costs based on sales. If the phone division is dropped, $150,000 of the fixed costs allocated to that division could be eliminated. The impact on Valber's operating income from eliminating the phone division would be: 
A) $30,000 increase 
B) $150,000 increase 
C) $150,000 decrease 
D) $15,000 increase 
E) $30,000 decrease

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Valber Company Is Considering Eliminating Its Phone Division