33. Down Co. has 3 divisions: R, S, and T. Division R's income statement shows the following for The year ended December 31, 2001: Sales $1,000,000 Cost of goods sold {800,000} Gross profit $ 200,000 Selling expenses $100,000 Administrative expenses 250,000 1350,000) Net loss 1150.000) Cost of goods sold is 75 percent variable and 25 percent fixed. Of the fixed costs, 60 percent are avoidable if the division is closed. All of the selling expenses relate to the division and would be eliminated if Division R were eliminated. Of the administrative expenses, 90 percent are applied from corporate costs. If Division R were eliminated, Down Co. income would a. increase by $150,000. b. decrease by $ 75,000. c. decrease by $155,000. (:1. decrease by $215,000. ANSWER: c NIEDIUM