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 $100,000 of its fixed costs are avoidable. The impact on Sammys operating income from eliminating the commercial division would be:

	Garden	Farm	Commercial
Sales	$ 678,000	$ 920,000	$ 692,000
Variable costs	372,900	414,000	649,800
Contribution margin	305,100	506,000	42,200
Fixed costs	247,200	335,500	252,400
Net income (loss)	57,900	170,500	(210,200)

Question 31 Select one:

a.

$10,200 decrease

b.

$45,000 increase

c.

$57,800 increase

d.

$15,000 increase

e.

$57,800 decrease