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Vanikord Corporation currently has two divisions which had the following operating results for last year: Cork Division Rubber Division Sales $503,200 $393,600 Variable costs 210,960
Vanikord Corporation currently has two divisions which had the following operating results for last year:
Cork Division | Rubber Division | |
Sales | $503,200 | $393,600 |
Variable costs | 210,960 | 300,640 |
Contribution margin | 292,240 | 92,960 |
Traceable fixed costs | 136,400 | 63,600 |
Segment margin | 155,840 | 29,360 |
Allocated common corporate fixed costs | 91,600 | 53,200 |
Net operating income (loss) | $64,240 | ($23,840) |
Because the Rubber Division sustained a loss, the president of Vanikoro is considering the elimination of this division. All of the division's traceable fixed costs could be avoided if the division was dropped. None of the allocated common corporate fixed costs could be avoided. If the Rubber Division was dropped at the beginning of last year, how much higher or lower would Vanikoro's total net operating income have been for the year?
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