- Valber Company Is Considering Eliminating Its Phone Division The Company Allocates Fixed Costs Based On Sales If The P 1 (16.15 KiB) Viewed 60 times
Valber Company is considering eliminating its Phone division. The company allocates fixed costs based on sales. If the Phone division is dropped, all of its variable costs are avoidable, and $150,000 of its fixed costs are avoidable. The impact on Valber's income from eliminating the Phone division is: Tablets. $ 694,000 Laptops $871,500 635,000 Phones $ 975,000 Sales Desktops $ 356,000 201,000 155,000 Variable costs 528,000 795,000 Contribution margin 236,500 166,000 180,000 Fixed costs 71,200 174,300 138,800 195,000 Net income (loss) 83,800 62,200 27,200 (15,000)