Find what will be effect on total profit if oaks closes down

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Golden Age operates three retirement homes and expects the following results next year:

                                           Oaks                     Pines                Elms                      Total

Revenue                               $100,000             $150,000             $180,000       $430,000

Variable Costs                          $45,000                $60,000              $60,000       $165,000

Contribution Margin                    $55,000                 $90,000            $120,000       $265,000

Fixed Costs                              $60,000                    $40,000            $60,000       $160,000

Income                                      $-5,000                     $50,000         $60,000           $105,000

Question 1: Suppose $25,000 of the fixed costs are avoidable. What will be the effect on total profit, if The Oaks closes down?

Reference no: EM132526952

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