Carns Company is considering eliminating its small tools division, which reported an operating loss for...
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Carns Company is considering eliminating its small tools division, which reported an operating loss for the recent year of $103,000. Division sales for the year were $1,490,000 and its variable costs were $1,355,000. The fixed costs of the division were $400,000. If the kitchen division is dropped, 30% of the fixed costs allocated it could be eliminated. The impact on Carnss operating income from eliminating the small tools division would be:
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