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Carns Company is considering eliminating its Small Tools Division, which reported a loss for the prior year of $155,000 as shown below. Segment Income
Carns Company is considering eliminating its Small Tools Division, which reported a loss for the prior year of $155,000 as shown below. Segment Income (Loss) Sales $ 1,380,000 Variable costs Contribution margin Fixed costs Income (loss) 1,245,000 135,000 290,000 $ (155,000) If the Small Tools Division is dropped, all of its variable costs are avoidable, and $116,000 of its fixed costs are avoidable. The impact on Carns's income from eliminating the Small Tools Division would be:
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