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Question - Carns Company is considering eliminating its Small Tools Division, which reported a loss for the prior year of $85,000 as shown below.
Segment Income (Loss)
Sales $1,310,000
Variable costs 1,175,000
Contribution margin 135,000
Fixed costs 220,000
Income (loss) $(85,000)
If the Small Tools Division is dropped, all of its variable costs are avoidable, and $99,000 of its fixed costs are avoidable. What the impact on Carns's income from eliminating the Small Tools Division?
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