8 June, 11:30

# San Ruiz Interiors provides design services to residential and commercial clients. The residential services produce a contribution margin of \$520,000 and have traceable fixed operating costs of \$550,000. Management is studying whether to drop the residential operation. If closed, the fixed operating costs will fall by \$450,000 and San Ruiz' income will: Multiple Choice A. increase by \$30,000. B. increase by \$70,000. C. increase by \$420,000. D. decrease by \$70,000. E. decrease by \$420,000.

+4
Answers (1)
1. 8 June, 14:45
0
San income will decrease by \$70,000

so correct option is D. decrease by \$70,000

Explanation:

given data

contribution margin = \$520,000

fixed operating costs = \$550,000

Decrease fixed operating costs fall = \$450,000

solution

as if residential operations are closed

we find here Decrease in income

Decrease in income = contribution margin - Decrease of fixed operating costs ... 1

Decrease in income = \$520,000 - \$450,000

Decrease in income = \$70,000

so that San income will decrease by \$70,000

so correct option is D. decrease by \$70,000
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “San Ruiz Interiors provides design services to residential and commercial clients. The residential services produce a contribution margin ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.