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Katen [24]
3 years ago
13

Soar incorporated is considering eliminating its mountain bike division, which reported an operating loss for the recent year of

$3,800. the division sales for the year were $1,058,000 and the variable costs were $868,000. the fixed costs of the division were $201,000. 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:
Business
1 answer:
Strike441 [17]3 years ago
5 0
I think that the answer would be 30% of the fixed costs for $60,300 plus $3800=64,100  ie including the loss which would be saved if the mountain bike business was eliminated. The $3800 represents the operating loss for the mountain bike business.
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