A company is considering eliminating its backpack division, which reported an operating loss for the recent year of $42,000. The division sales for the year were $960,000 and the variable costs were $475,000. The fixed costs of the division were $527,000. If the backpack division is dropped, all of the fixed costs allocated to the division will be eliminated. The impact on the company's operating income for eliminating this business segment would be:Group of answer choices$485,000 decrease$42,000 increase$274,200 decrease$42,000 increase$274,200 increase

Granfield Company is considering eliminating its backpack division, which reported a loss for the recent year of $44,000 as shown below. Segment Income (Loss)Sales $ 968,000Variable costs 479,000Contribution margin 489,000Fixed costs 533,000Income (loss) $ (44,000)If the backpack division is dropped, all $479,000 of its variable costs are avoidable, and $213,200 of its fixed costs are avoidable. The impact on Granfield’s income from eliminating this business segment would be:

A study has been conducted to determine if Product A should be dropped. Total sales of the product are $200,000 per year; total variable expenses are $140,000 per year. Total fixed expenses charged to the product are $90,000 per year. The company estimates that $40,000 of these fixed expenses will continue even if the product is dropped. These data indicate that if Product A is dropped, the company's overall operating income per year would change by how much?Multiple ChoiceAn increase of $30,000.A decrease of $20,000.A decrease of $10,000.An increase of $20,000.

Soar Incorporated is considering eliminating its mountain bike division, which reported a loss for the recent year of $5,400 as shown below. Segment Income (Loss)Sales $ 1,110,000Variable costs 884,000Contribution margin 226,000Fixed costs 231,400Income (loss) $ (5,400)If the mountain bike division is dropped, all $884,000 of its variable costs are avoidable, and $69,420 of its fixed costs are avoidable. The impact on income for eliminating this business segment would be:

Valdez Company is considering eliminating its kitchen division, which reported an operating loss of $53,000 for the past year as shown below. Segment Income (Loss)Sales $ 1,040,000Variable costs 775,000Contribution margin 265,000Fixed costs 318,000Income (loss) $ (53,000)If the kitchen division is dropped, all $775,000 of its variable costs are avoidable, and $190,800 of its fixed costs are avoidable. The impact on Valdez’s income from eliminating this business segment would be:Multiple Choice$74,200 decrease$265,000 increase$274,200 decrease$74,200 increase$265,000 decrease

Gion Company is considering eliminating its Windows division, which reported a loss for the prior year of $96,000 as shown below. Segment Income (Loss)Sales $ 1,121,000Variable costs 986,000Contribution margin 135,000Fixed costs 231,000Income (loss) $ (96,000)If the Windows division is dropped, all of its variable costs are avoidable, and $150,150 of its fixed costs are avoidable. The impact on Gion’s operating income from eliminating this business segment would be: