Guild Glass Limited, has three divisions: Commercial, Nonprofit and Residential. The segmented income statement for 20x8 revealed the following:

Commercial Nonprofit Residential Total

Division Division Division Company

$ $ $ $

Sales 290,000 533,000 837,000 1,660,000

Variable cost 147,000 435,000 472,000 1,054,000

Contribution

margin 143,000 98,000 365,000 606,000

Direct fixed

Expenses 124,000 106,000 139,000 369,000

Segment

Margin 19,000 (8,000) 226,000 237,000

Less common

Fixed costs 168,000

Operating income 69,000

Required:

1. How will Guild Glass Limited be affected if the Nonprofit Division is dropped?
2. If the Nonprofit Division is dropped, the sales of the Residential Division will decrease by 10%. How will the company be affected if the Nonprofit Division is dropped?