Sammy Company is considering eliminating its commercial division. The company allocates fixed costs based on division sales. If the commercial division is dropped, $120,000 of the fixed costs allocated to it could be eliminated. The impact on Sammys operating income from eliminating the commercial division would be:

Sammy Company is considering eliminating its commercial division. The company allocates fixed costs based on division sales. If the commercial division is dropped, $120,000 of the fixed costs allocated to it could be eliminated. The impact on Sammys operating income from eliminating the commercial division would be:

	Garden				Farm				Commercial
Sales	$	683,000			$	980,000			$	752,000
Variable costs		392,900				434,000				669,800
Contribution margin		290,100				546,000				82,200
Fixed costs		267,200				355,500				325,400
Net income (loss)		22,900				190,500				(243,200	)