Soar Incorporated is considering eliminating its mountain bike division, which reported an operating loss for the recent year of $4,000. The division sales for the year were $1,051,000 and the variable costs were $861,000. The fixed costs of the division were $194,000. 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: Multiple Choice $54,200 decrease $190,000 decrease $190.000 increase $58,200 decrease $131,800 decrease

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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Soar Incorporated is considering eliminating its mountain bike division, which reported an operating loss for the recent year of $4,000. The division sales
for the year were $1,051,000 and the variable costs were $861,000. The fixed costs of the division were $194,000. 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:
Multiple Choice
$54,200 decrease
$190,000 decrease
$190,000 increase
$58,200 decrease
$131,800 decrease
Transcribed Image Text:Soar Incorporated is considering eliminating its mountain bike division, which reported an operating loss for the recent year of $4,000. The division sales for the year were $1,051,000 and the variable costs were $861,000. The fixed costs of the division were $194,000. 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: Multiple Choice $54,200 decrease $190,000 decrease $190,000 increase $58,200 decrease $131,800 decrease
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