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) $132,100 decrease
B) $54,900 decrease
C) $190,000 increase
D) $57,900 decrease
E) $190,000 decrease

Question

Quizplus · Accepted Answer

The Answer of 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) $132,100 decrease
B) $54,900 decrease
C) $190,000 increase
D) $57,900 decrease
E) $190,000 decrease

Soar Incorporated Is Considering Eliminating Its Mountain Bike Division, Which