Valdez Company is considering eliminating its kitchen division, which reported an operating loss of $56,000 for the past year as shown below. Segment Income (Loss) Sales $ 1,110,000 Variable costs 827,000 Contribution margin 283,000 Fixed costs 339,000 Income (2018) $ (56,000) If the kitchen division is dropped, all $827000 of its variable costs are avoidable, and $203,400 of its fixed costs are avoidable. The impact on Valdez's Income from eliminating this business segment would be: TB MC Qu. 10-82 (A Granfield Company has a piece of manufacturing equipment with a book value of $42,000 and a remaining useful life of four years. At the end of the four years the equipment will have a zero-salvage value. Granfield can purchase new equipment for $132,000 and receive $23,600 in return for trading in its current equipment . The current equipment has variable manufacturing costs of $43,000 per year. The new equipment will reduce variable manufacturing costs by $21,000 per year over its fouryear iffe. The total increase or decrease in income by replacing the current equipment with the new equipment is Lahire Soar Incorporated is considering eliminating its mountain bike division, which reported a loss for the recent year of $5,400 as shown below. Segment Income (Loss) Sales $ 1,110,000 Variable costs 884,000 Contribution margin 226,000 Fixed costs 231,400 Income (loss) $ (5,400) If the mountain bike division is dropped, all $884,000 of its variable costs are avoidable, and $69,420 of its fixed costs are avoidable. The impact on Income for eliminating this business segment would be: Lattimer Company had the following results of operations for the past year: Per Unit $ 12.00 Annual Total $ 244,800 Contribution margin income statement Sales (20,400 units) Variable costs Direct materials Direct labor Overhead Contribution margin Fixed costs Fixed overhead Fixed selling and administrative expenses Income 1.50 4.00 1.00 5.50 30,600 81,600 20,400 112,200 1.00 1.40 $ 3.10 20,400 28,560 $ 63,240 A foreign company offers to buy 6,800 units at $7.50 per unit. In addition to variable costs, selling these units would add a $0.25 seling expense for export fees. Lottimer's onnual production capacity is 30,400 units. If Lattimer accepts this additional business, the special order will yield of Hordel Company needs to determine a markup for a new product. Hordel expects to sell 5,000 units and wants a target profit of $86 per unit. Additional information is as follows: Variable costs per Unit Fixed Costs (total) Direct materials $ 21 Overhead $ 45, 920 Direct labor 42 General and administrative 34,920 Overhead General and administrative 23 22 Using the variable cost method, what markup percentage to variable cost should be used