Valdez Company is considering eliminating its kitchen division, which reported an operating loss of $58,000 for the past year. Kitchen division sales for the year were $1,090,000, and its variable costs were $780,000. The fixed costs of the division were $321,000. If the kitchen division is dropped, 65% of the fixed costs allocated to it could be eliminated. The impact on Valdezs operating income from eliminating this business segment would be:

• $101,350 decrease

• $263,000 increase

• $345,350 decrease

• $101,350 increase

• $263,000 decrease