Answer Happy

Sammy Company is considering eliminating its Commercial division. The company allocates fixed costs based on division sales if the Commercial division is dropped, all of its variable costs are avoidable, and $100,000 of its fixed costs are avoidable. The impact on Sammy's operating income from eliminating the commercial division would be Sales Variable costs Contribution margin Fixed costs Net income (los) Garden $ 678,000 372,900 305, 100 247,200 57,900 Farm $.920,000 414,000 506,000 335,500 179,500 Commercial $ 692,000 649,800 42,200 252,400 (210,200) Multiple Choice $10.200 decrease $45,000 increase