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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 $114,000 of
Sammy Company is considering eliminating its commercial division. The company allocates fixed costs based on division sales if the commercial division is dropped $114,000 of the fixed costs allocated to it could be eliminated. The impact on Sammy's operating income from eliminating the commercial division would be: Sales Variable costs Contribution margin Fixed costs Set income (los) Garden $686,000 386.900 299, 100 261,200 37.900 Farm Commercial $962,000 $ 734,000 428,000 663,800 534,000 70,200 349,500 301,400 184,500 (231, 200) Multiple Choice $21.000 increase $7.000 Increase $43.800 Increase
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