Soar Incorporated is considering eliminating its mountain bike division, which reported an operating loss for the recent year of
$2,000. The division sales for the year were $1,040,000, and the variable costs were $850,000. The fixed costs of the division were $183,000. 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. $54,900 decrease
B. $135,100 decrease
C. $52,900 decrease
D. $190,000 increase
E. $190,000 decrease
A. $54,900 decrease
B. $135,100 decrease
C. $52,900 decrease
D. $190,000 increase
E. $190,000 decrease
1 answer:
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