Question
Soar Incorporated is considering eliminating its mountain bike division, which reported a loss for the recent year of $5,000 as shown below. Segment Income (Loss)
Soar Incorporated is considering eliminating its mountain bike division, which reported a loss for the recent year of $5,000 as shown below. Segment Income (Loss) Sales $ 1,100,000 Variable costs 880,000 Contribution margin 220,000 Fixed costs 225,000 Income (loss) $ (5,000) If the mountain bike division is dropped, all $880,000 of its variable costs are avoidable, and $67,500 of its fixed costs are avoidable. The impact on income for eliminating this business segment would be: Multiple Choice $67,500 decrease $152,500 decrease $62,500 decrease $220,000 increase $220,000 decrease
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