Sammy Company Is Considering Eliminating Its Commercial Division

Sammy Company is considering eliminating its commercial division. The company allocates fixed costs based on division sales. If the commercial division is dropped, $100,000 of the fixed costs allocated to it could be eliminated. The impact on Sammy's operating income from eliminating the commercial division would be:

A) $10,200 decrease
B) $45,000 increase
C) $57,800 increase
D) $15,000 increase
E) $57,800 decrease

Correct Answer:

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