Valdez Company Is Considering Eliminating Its Kitchen Division,which Reported an Operating

Valdez Company is considering eliminating its kitchen division,which reported an operating loss of $53,000 for the past year.Kitchen division sales for the year were $1,040,000,and its variable costs were $775,000.The fixed costs of the division were $318,000.If the kitchen division is dropped,60% of the fixed costs allocated to it could be eliminated.The impact on Valdez's operating income from eliminating this business segment would be:

A) $74,200 decrease
B) $265,000 increase
C) $274,200 decrease
D) $74,200 increase
E) $265,000 decrease

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