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Lucas Inc. has two divisions, Newcastle and Sydney. Following is the income statement for the previous year: Newcaste Sydney Total Sales $560,000 $336,000 $896,000 Variable

Lucas Inc. has two divisions, Newcastle and Sydney. Following is the income statement for the previous year:

Newcaste Sydney Total
Sales $560,000 $336,000 $896,000
Variable Costs 176,000 164,000 340,000
Contribution Margin 384,000 172,000 556,000
Fixed Costs (allocated) 284,375 180,625 465,000
Profit Margin $99,625 ($8,625) $91,000

What would Lucas profit margin be if the Sydney division was dropped and all fixed costs are unavoidable?

A.

$99,625 profit

B.

$91,000 profit

C.

$81,000 loss

D.

$71,000 loss

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