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CIMA Advanced Management Accounting P2 Question # 41 Topic 5 Discussion

CIMA Advanced Management Accounting P2 Question # 41 Topic 5 Discussion

P2 Exam Topic 5 Question 41 Discussion:
Question #: 41
Topic #: 5

Oliver owns a computer repair company. He is looking to close of of his departments as the demand for computer cleaning has dropped dramatically in the last 2 years and is no longer profitable.

The contribution margin of the department is £12,000, and the overheads are £23,000 (out of which £4,000 cannot be eliminated).

How would closing this department impact operating income?


A.

Increase operating income by £7,000


B.

Decrease operating income by £7,000


C.

Decrease operating income by £12,000


D.

Increase operating income by £12,000


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