The ABC Company has a division that has the following income statement:

Sales$5,000

Variable costs3,000

_____

Contribution Margin 2,000

Fixed Costs2,500

_____

Operating Income-500

What is the effect of operating this division on the operating income of the ABC Company if $800 of the fixed costs will not be avoided if the company shuts down the division? Should the ABC Company shut down the division in this case?

What is the effect of operating this division on the operating income of the ABC Company if $400 of the fixed costs will not be avoided if the company shuts down the division? Should the ABC Company shut down the division in this case?