Impact on operating income for eliminating business segment

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Reference no: EM131219116

Soar Incorporated is considering eliminating its mountain bike division, which reported an operating loss for the recent year of $1,000. The division sales for the year were $1,046,000 and the variable costs were $856,000. The fixed costs of the division were $189,000. 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) $133,300 decrease

b) $190,000 increase

c) $190,000 decrease

d) $54,100 decrease

e) $56,700 decrease

Reference no: EM131219116

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