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Sammy Company is considering eliminating its Commercial division. The company allocates fixed costs based on division sales. If the Commercial division is dropped, all

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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 $101,000 of its fixed costs are avoidable. The impact on Sammy's operating income from eliminating the commercial division would be: Sales Variable costs Contribution margin Fixed costs Net income (loss) Garden Farm $ 680,000 373,900 306,100 $ 923,000 Commercial $ 695,000 415,000 650,800 508,000 44,200 248,200 336,500 253,500 57,900 171,500 (209,300)

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