Sanra company 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

Sanra company 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

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter10: Short-term Decision Making

Section: Chapter Questions

Problem 12MC: Youngstown Construction plans to discontinue its rooting segment. Last year, this segment generated...

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