A study has been conducted to determine if one of the departments of Swallow Company should be discontinued. The contribution margin in the department is $130,000 per year. Fixed expenses charged to the department are $150,000 per year. It is estimated that $120,000 of these fixed expenses could be eliminated if the department is discontinued.   Should the department be discontinued?  Why or why not?  Show computations to support your answer.单项选择题

A

The department should not be discontinued because it results in an overall increase in net operating income of $20,000.

B

The department should be discontinued because it results in an overall decrease in net operating income of $20,000.

C

The department should not be discontinued because it results in an overall increase in net operating income of $10,000.

D

The department should not be discontinued because it results in an overall decrease in net operating income of $10,000.

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