Carla Vista, Inc. operates three divisions, Weak, Average, and Strong. As it turns out, the Weak division has the lowest operating income, and the president wants to close it. Survival of the fittest, I say! was his response when the Weak divisions manager, insisted Brian, that his division earned money for the company. Following is the most recent financial analysis for each division:

		Weak			Average		Strong
Sales revenue		$ 126,400			$ 454,500		$ 524,700
Variable expenses		50,400			246,900		306,100
Contribution margin		76,000			207,600		218,600
Direct expenses		30,000			79,600		118,000
Allocated expenses		70,800			70,800		70,800
Operating income		$( 24,800)			$ 57,200		$ 29,800

By how much would total income change if the Weak division were dropped?

Total income will select an option (increase or decrease) by $

Based on the way allocated expenses are divided among the divisions, what do you think will happen to the Average division if the company continues to prepare financial statements in this way, assuming Weak was dropped?

If Weak is dropped, then Average will report allocated expenses of $ , resulting in an select an option (operating income or operating loss) of $ for the division.