Multiple Choice
Carns Company is considering eliminating its small tools division,which reported an operating loss for the recent year of $85,000.Division sales for the year were $1,310,000 and its variable costs were $1,175,000.The fixed costs of the division were $220,000.If the kitchen division is dropped,45% of the fixed costs allocated it could be eliminated.The impact on Carns's operating income from eliminating the small tools division would be:
A) $74,200 decrease
B) $36,000 decrease
C) $220,000 decrease
D) $36,000 increase
E) $99,000 decrease
Correct Answer:
Verified
Correct Answer:
Verified
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