MC Qu. 80 Soar Incorporated is considering...

Soar Incorporated is considering eliminating its mountain bike division, which reported an operating loss for the recent year of $6,000. The division sales for the year were $1,042,000 and the variable costs were $863,000. The fixed costs of the division were $185,000. If the mountain bike division is dropped, 30% of the fixed costs allocated to that division could be eliminated. The impact on operating income for eliminating this business segment would be:

Multiple Choice

• $55,500 decrease

• $123,500 decrease

• $49,500 decrease

• $179,000 increase

• $179,000 decrease