Soar Incorporated Is Considering Eliminating Its Mountain Bike Division,which Reported

Soar Incorporated is considering eliminating its mountain bike division,which reported an operating loss for the recent year of $3,000.The division sales for the year were $1,050,000 and the variable costs were $860,000.The fixed costs of the division were $193,000.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) $57,900 decrease
B) $132,100 decrease
C) $54,900 decrease
D) $190,000 increase
E) $190,000 decrease

Correct Answer:

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