A manufacturer is considering eliminating a segment because it shows the following $6,000 loss. All $20,000 of its variable costs are avoidable, and $36,000 of its fixed costs are avoidable. 

(a) Compute the income increase or decrease from eliminating this segment. 

(b) Should the segment be eliminated?

Transcribed Image Text:

Segment Income (Loss) Sales ... $60,000 Variable costs.... 20,000 Contribution margin ..... 40,000 Fixed costs 46,000 Income (loss)... $ (6,000)