A segment of Music Hazard Inc. has the following data.

Sales $200,000

Variable expense $140,000

Fixed expenses $100,000

If this segment is eliminated, what will be the effect on the remaining company? Assume that 50% of the fixed expenses will be eliminated and the rest will be allocated to the segments of the remaining company.

By how much will income increase or decrease? (Worth 2 pts.)

What are some considerations the companies managers may want to take into account when making the decision to discontinue a product line, department, or other segment? (Worth 1.5 pts.