Question
Soar Incorporated is considering eliminating its mountain bike division, which reported an operating loss for the recent year of $2,700. The division sales for the
Soar Incorporated is considering eliminating its mountain bike division, which reported an operating loss for the recent year of $2,700. The division sales for the year were $1,047,000 and the variable costs were $857,000. The fixed costs of the division were $190,000. If the mountain bike division is dropped, 30% of the fixed costs allocated to that division could be eliminated. The impact on operating income for eliminating this business segment would be: |
A. $190,000 increase
B. $133,000 decrease
C. $190,000 decrease
D. $57,000 decrease
E. $54,300 decrease
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