XYZ Limited makes beds in three sizes: twin, queen and king. Twin beds have shown a loss for several years, similar to the operating loss shown below:

	Twin	Queen	King
Sales	$150,000	$250,000	$280,000
Variable costs	75,000	150,000	190,000
Contribution margin	75,000	100,000	90,000
Fixed costs	80,000	80,000	80,000
Operating income	($ 5,000)	$ 20,000	$ 10,000

None of the fixed costs are avoidable. What will be the total operating income for the corporation if twin beds are discontinued?

	a.	$15,000 loss
	b.	$50,000 loss
	c.	$30,000 profit
	d.	$105,000 profit

A common error managers make in deciding to close a division is allowing

	a.	allocated fixed costs to influence the decision.
	b.	avoidable costs to influence the decision.
	c.	customer needs and desires to influence the decision.
	d.	qualitative issues to influence the decision.