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Type text) the 17. Danny's Bike Company (DBC) manufactures racing bikes and dirt bikes. DBC operates racing bike division and the dirt bike division as
Type text) the 17. Danny's Bike Company (DBC) manufactures racing bikes and dirt bikes. DBC operates racing bike division and the dirt bike division as separate business segments. DBC has prepared the following segmented income statement: Dirt Bkes S750,000$500,000 $250,000 200,000 140,000 30,000 Total Company dingBkes Pevenue Variable Expenses Cost of goods sold $340,000 Other variable expenses Total variable expenses 90,00060,000 Contribution Margin Traceable ixed Expenses Divisional Segment Margin Common Axed Expenses Net Operating Income 320,000 $240,000 $80,000 190,000 $130,000 60,000 $70,000 100,000 90,000 $140,000 ($10,000) DBC is contemplating closing the Dirt Bike Division. If they do that they expect to increase racing bike production and sales by 50% without increasing that division's fixed expenses. If DBC closes the dirt bike division, how much will DBC's operating income increase? a. $40,000 b. $120,000 c. $10,000 d. $130,000 e. $110,000
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