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: Garden Farm Commercial Sales$678,000 $920,000 $692,000 Variable costs 372,900 414,000 649,800 Contribution margin 305,100 506,000 42,200 Fixed costs 247,200 335,500 252,400 Net income (loss) 57,900 170,500 (210,200)
A. $10,200 decrease
B. $15,000 increase
C. $57,800 increase
D. $57,800 decrease
E. $45,000 increase
Answer: C
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