Carns Company is considering eliminating its small tools division, which reported an operating loss for the recent year of $91,000. Division sales for the year were $1,370,000 and its variable costs were $1,235,000. The fixed costs of the division were $280,000. If the kitchen division is dropped, 40% of the fixed costs allocated it could be eliminated. The impact on Carnss operating income from eliminating the small tools division would be:

rev: 12_03_2019_QC_CS-192507

Multiple Choice

• $48,800 decrease

• $112,000 increase

• $23,000 increase

• $23,000 decrease

• $112,000 decrease