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Compute the income increase or decrease

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Question - A manufacturer is considering eliminating a segment because it shows the following $6,600 loss. All $21,900 of its variable costs are avoidable, and $40,400 of its fixed costs are avoidable.

Segment Income (Loss)

Sales $65,700

Variable costs 21,900

Contribution margin 43,300

Fixed costs 50,400

Income (loss) (6,600)

Required -

(a) Compute the income increase or decrease from eliminating this segment.

(b) Should the segment be eliminated?

Reference no: EM133072388

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