Question
Valdez Company is considering eliminating its kitchen division, which reported an operating loss of $57,000 for the past year as shown below. Segment Income (Loss)
Valdez Company is considering eliminating its kitchen division, which reported an operating loss of $57,000 for the past year as shown below. Segment Income (Loss) Sales Variable costs Contribution margin Fixed costs Income (loss) $ 1,120,000 835,000 285,000 342,000 $ (57,000) Chec If the kitchen division is dropped, all $835,000 of its variable costs are avoidable, and $205,200 of its fixed costs are avoidable. The impact on Valdez's income from eliminating this business segment would be:
A. 79800 decrease
B. 285000 increase
C.295800 decrease
D. 79800 increase
E. 285000 decrease
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