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Question - Finlay Grace Sullivan & Company has two sales offices: one located in Portland, Maine, and one in Portsmouth, New Hampshire. Management is considering dropping the Portland Office Management is considering dropping the Portland office. The company's records the following information:
Portland Portsmouth
Sales $40,000 $50,000
Direct Cost:
Variable $15,000 $25,000
Fixed $10,000 $10,000
What will be the effect on income if the Portland office is eliminated and half of its fixed cost are avoided?
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