Valber Company is considering eliminating its phone division. The company allocates fixed costs based on sales. If the phone division is dropped, $154,000 of the fixed costs allocated to that division could be eliminated. The impact on Valbers operating income from eliminating the phone division would be:

	Desktops				Laptops				Tablets				Phones
Sales	$	368,000			$	883,500			$	706,000			$	979,000
Variable costs		205,000				639,000				532,000				799,000
Contribution margin		163,000				244,500				174,000				180,000
Fixed costs		75,200				178,300				142,800				199,000
Net income (loss)		87,800				66,200				31,200				(19,000	)

• $9,000 decrease

• $154,000 increase

• $154,000 decrease

• $19,000 increase

• $26,000 decrease