Question $13$

$3$ Points

Sammy Company is considering eliminating its Commercial division. The company allocates fixed costs based on division sales. If the commercial division is dropped, all of its variable costs are avoidable, and $$100,000$ of its fixed costs are avoidable. Thus, $$152,400$ in costs will still remain. The impact on Sammy's overall operating income from eliminating the commercial division would be:

$$10,200$ decrease

$$45,000$ increase

$$57,800$ increase

$$15,000$ increase

$$57,800$ decrease