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Soar Incorporated is considering eliminating its mountain bike division, which reported a loss for the recent year of $3,400 as shown below. Segment Income (Loss)
Soar Incorporated is considering eliminating its mountain bike division, which reported a loss for the recent year of $3,400 as shown below. Segment Income (Loss) Sales $ 1,060,000 Variable costs 864,000 Contribution margin 196,000 Fixed costs 199,400 Income (loss) $ (3,400) If the mountain bike division is dropped, all $864,000 of its variable costs are avoidable, and $59,820 of its fixed costs are avoidable. The impact on operating income for eliminating this business segment would be: Multiple Choice $56,420 decrease $196,000 decrease $59,820 decrease $136,180 decrease $196,000 increase
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