QUESTION:

George Ltd. has three divisions. A segmented income statement follows:

	Division A	Division B	Division C	Total
Sales revenue	$30,720	$4,440	$7,200	$42,360
Variable costs	$26,760	$1,080	$5,400	$33,240
Contribution margin	$3,960	$3,360	$1,800	$9,120
Less direct fixed expenses
Depreciation	$1,200	$360	$240	$1,800
Salaries	$2,280	$2,040	$1,920	$6,240
Segment margin	$480	$960	-$360	$1,080

Direct fixed expenses are depreciation and salaries. All depreciation on the equipment is dedicated to the divisions and none of the equipment can be sold. Also, each of the three divisions has a different supervisor whose position would remain and be reassigned if the division was closed.

Using the above information answer the following questions.

Should George Ltd. discontinue Division C?

Enter the letter A for YES.

Enter the letter B for NO.

Would operating income increase or decrease if Division C was dropped?

Enter the letter A for increase.

Enter the letter B for decrease.

By how much will operating income increase or decrease by if Division C was dropped?

Enter your answer as a positive number even if operating income would decrease.