Considering eliminating its mountain bike division

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Reference no: EM131211726

Soar Incorporated is considering eliminating its mountain bike division, which reported an operating loss for the recent year of $3,300. The division sales for the year were $1,053,000 and the variable costs were $863,000. The fixed costs of the division were $196,000. If the mountain bike division is dropped, 30% of the fixed costs allocated to that division could be eliminated. The impact on operating income for eliminating this business segment would be:

(A) $190,000 decrease

(B) $190,000 increase

(D) $55,500 decrease

(E) $131,200 decrease

Reference no: EM131211726

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