Answer:
$10,000
Explanation:
We need to find the segment margin of the deparment, which is equal to annual contribution margin minus avoidable fixed costs:
Wallen Corporation
Annual contribution margin            $80,000
Annual fixed costs                           $160,000
Unavoidable fixed costs                 $90,000
Avoidable fixed costs                     $70,000
Segment Margin  = Annual contribution margin - avoidable fixed costs
                              = $80,000 - $70,000
                              = $10,000
Therefore, if the company eliminated this department, it would have a financial advantage of $10,000, equivalent to the deparment's current segment margin.
                      
 
        
             
        
        
        
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If peanuts cost .25 per bag, you would divide $10 by .25 to determine how many bags you are able to buy. 
 
        
             
        
        
        
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