Segment elimination decision Reese Transport Company divides its operations into four divisions. A recent income statement for Lombardo Division follows.

Required

a. Should Lombardo Division be eliminated? Support your answer by explaining how the division’s elimination would affect the net income of the company as a whole. By how much would companywide income increase or decrease?

b. Assume that Lombardo Division is able to increase its revenue to $540,000 by raising its prices.
Would this change the decision you made in Requirement a? Determine the amount of the increase or decrease that would occur in companywide net income if the segment were eliminated if revenue were $540,000.

c. What is the minimum amount of revenue required to justify continuing the operation of Lombardo Division?