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Question - A study has been conducted to determine if one of the departments of Lucy Company should be discontinued. The contribution margin in the department is $100,000 per year. Fixed expenses charged to the department are $130,000 per year. It is estimated that $80,000 of these fixed expenses could be eliminated if the department is discontinued. These data indicate that if the department is discontinued, what the Lucy's overall net operating income?
a) Increase by $50,000 per year
b) Decrease by $20,000 per year
c) Increase by $20,000 per year
d) Decrease by $50,000 per year
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