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Carns Company is considering eliminating its small tools division, which reported an operating loss for the recent year of $93,000. Division sales for the year
Carns Company is considering eliminating its small tools division, which reported an operating loss for the recent year of $93,000. Division sales for the year were $1,390,000 and its variable costs were $1,255,000. The fixed costs of the division were $300,000. If the kitchen division is dropped, 35% of the fixed costs allocated it could be eliminated. The impact on Carns's operating income from eliminating the small tools division would be: Multiple Choice $105,000 increase $63,000 decrease $30,000 decrease $105,000 decrease $30,000 increase
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