Reference no: EM132536503

The following information was made available concerning the four departments of the Snake-Bite Company.

                                         A               B              C                    D

Sales (in $)                        100,000      25,000      50,000         75,000

Variable cost of gods sold        70,000        15,000      30,000      50,000

Variable selling expenses           10,000         2,000       6,000      12,000

Contribution margin                    20,000         8,000     14,000     13,000

Fixed costs                                 20,000        5,000      10,000        15,000

Profit                                             0             3,000           4,000           (2,000)

Question 1: The president of the company has decided that one department must be dropped. Fixed costs have been assigned according to the sales of each department. Regardless of your decision, fixed costs will be reduced by 25%. Which department should be dropped so as to give the greatest benefit to the company?

Select one:

Option a. A

Option b. B

Option c. C

Option d. D