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October 31, 2021

San Ruiz Interiors provides design services to residential and commercial clients. The residential services produce

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Question 1

San Ruiz Interiors provides design services to residential and commercial clients. The residential services produce a contribution margin of $450,000 and have traceable fixed operating costs of $480,000. Management is studying whether to drop the residential operation. If closed, the fixed operating costs will fall by $370,000 and San Ruiz’ income will:

decrease by $80,000.

increase by $80,000.

increase by $30,000.

increase by $340,000.

decrease by $340,000.

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