MC Qu. 81 Granfield Company is considering...

Granfield Company is considering eliminating its backpack division, which reported an operating loss for the recent year of $42,100. The division sales for the year were $961,900 and the variable costs were $476,000. The fixed costs of the division were $528,000. If the backpack division is dropped, 40% of the fixed costs allocated to that division could be eliminated. The impact on Granfield's operating income for eliminating this business segment would be:

Multiple Choice

• $274,700 increase

• $485,900 decrease

• $211,200 increase

• $274,700 decrease

• $485,900 increase