Reference no: EM133101253

Question - A portion of the divisional income statement for the year just ended is presented below in a condensed form.

Department F

Net sales $93,800

Cost of goods sold 72,400

Gross profit $21,400

Operating expenses 28,900

Loss from operations $(7,500)

The operating expenses of Department F include $16,000 for direct expenses.

It is estimated that the discontinuance of Department F would not have affected the sales of the other departments nor have reduced the indirect expenses of the business. Assuming the accuracy of these estimates, determine the effect (increase or decrease and the amount) on the operating income of the business if Department F had been discontinued.