. The operations of Smits Corporation are divided into the Child Division and the Jackson Division. Projections for the next year are as follows:

Child Jackson

Division Division Total

Sales revenue $250,000 $180,000 $430,000

Variable expenses 90,000 100,000 190,000

Contribution margin $160,000 $ 80,000 $240,000

Direct fixed expenses 75,000 62,500 137,500

Segment margin $ 85,000 $ 17,500 $102,500

Allocated common costs 35,000 27,500 62,500

Total relevant benefit (loss) $ 50,000 $(10,000) $ 40,000

Operating income for Smits Corporation as a whole if the Jackson Division were dropped would be

a. $22,500.

b. $40,000.

c. $50,000.

d. $60,000.