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Question - Boris Company has multiple business units. Unit A has the following information: sales revenue is $200,000; variable expenses are $140,000; fixed expenses are $100,000. Fixed expenses - which are mostly represented by traceable (and avoidable) business unit costs (e.g., rent, depreciation, etc.) - are calculated for each business unit separately. What is the effect on Boris Company as a whole if Unit A is eliminated?
Total profit will decrease by $40,000.
Total profit will decrease by $60,000.
Total profit will increase by $40,000.
Total profit will increase by $60,000.
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