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wed He Sammy Company is considering eliminating its commercial division. The company allocates fixed costs based on division sales. If the commercial division is dropped,
wed He Sammy Company is considering eliminating its commercial division. The company allocates fixed costs based on division sales. If the commercial division is dropped, S114,000 of the fixed costs allocated to eliminated. The impact on Sammy's operating income from eliminating the commercial division would be Garden Farm Sales Variable costs Contribution margin Fixed costs Net income (loss) $686,000 386,900 299, 100 261,200 37,900 $962,000 428,000 534,000 349,500 184,500 Commercial $734,000 663,800 70,200 301,400 (231,200) Multiple Choice O $3,200 decrease $21000 increase O $43,800 increase O $7.000 increase $43 800 decrease
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