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

Business

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