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QUESTION 5 Soar Incorporated is considering eliminating its mountain bike division, which reported an operating...

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QUESTION 5 Soar Incorporated is considering eliminating its mountain bike division, which reported an operating loss for the recent year of $3,000. The division sales for the year were $1,050,000 and the variable costs were $860,000. The fixed costs of the division were $193,000. 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: A. *$132,100 decrease B. $54,900 decrease o C. $190,000 increase OD. $57,900 decrease O QUESTION 6 Bluebird Mfg. has received a special one-time order for 15,000 bird feeders at $3 per unit. Bluebird currently produces and sells 75,000 units at $7.00 each. This level represents 80% of its capacity. Current production costs are $3.50 per unit, which includes $2.25 variable cost and $1.25 fixed cost. This special order will not affect total fixed costs. These bird feeders would be marketed under the wholesaler's name and would not affect Bluebird's sales through its normal channels. If Bluebird accepts this additional business, the effect on net income will be: O A. $45,000 increase. O B. $11,250 increase. O C. $33,750 increase. O D. $7,500 decrease

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