Amazon, Inc., has three divisions: N, C, and R. The segmented income statement for last year revealed the following:

Amazon, Inc. Divisional Profit Summary
	N. Division	C. Division	R. Division	Total Company
Sales	533,000	$250,000	$837,000	$1,620,000
Less variable costs	435,000	137,000	472,000	1,044,000
Contribution margin	$ 98,000	$113,000	$365,000 $	$ 576,000
Less direct fixed costs	106,000	100,000	139,000	345,000
Segment margin	($ 8,000)	$ 13,000	$226,000	$ 231,000
Less common fixed costs				120,000
Operating income				$ 111,000

1. How will Amazon be affected if the N Division is dropped?

2. Assume the elimination of the N Division causes the sales of the R Division to decrease by 10 percent. How will Amazon be affected if the N Division is dropped?