Sales

Variable expenses

Contribution Margin

Fixed Expenses

Net operating income (loss)

Division

Total

Shoes

Shirts

$4.200.000

$3.000.000

$1,200,000

2.000,000

1.500,000

500,000

2.200.000

1.500.000

700.000

2.200.000

1,300,000

900,000

200 000

(00.000)

The company predicts that $200,000 of the fixed expenses being charged to the Shirts Division are allocated costs that will continue even if the Shirts Division is eliminated. The elimination of the

Shirts Division will additionally cause a 30% drop in Shoes Division sales. If the company shuts down its Shirts Division, by how much will the company's overall net operating income change?

Increase by $410.000

Increase by $470,000

Decrease by $470.000

Decrease by $450.000