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. $190,000 decrease
B. $190,000 increase
C. $57,900 decrease
D. $54,900 decrease
E. $132,100 decrease
Answer: E
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