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The Dropinsky Company's management wants to determine if Segment B should be eliminated. The following data are available (in thousands). Segmented Income Statement Segment A
The Dropinsky Company's management wants to determine if Segment B should be eliminated. The following data are available (in thousands).
Segmented Income Statement | ||||
| Segment A | Segment B | Segment C | Total |
Sales | $250 | $ 225 | $350 | $825 |
Less variable costs | 75 | 150 | 150 | 375 |
Contribution margin | $175 | $ 75 | $200 | $450 |
Less direct fixed costs | 75 | 80 | 95 | 250 |
Segment margin | $ 100 | $ (05) | $105 | $200 |
Less common fixed costs |
|
|
| 105 |
Operating income |
|
|
| $ 95 |
Assuming all direct fixed costs of Segment B are avoidable, what would be the change in operating income if Segment B were eliminated?
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