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Sammy Company is considering eliminating its Commercial division. The company allocates fixed costs...

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Accounting

Sammy Company is considering eliminating its Commercial division. The company allocates fixed costs based on division sales. If the Commercial division is droppped, $100,000 of its fixed costs are avoidable. As a consequence of dropping the Commercial division, Sammys total income 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)

Multiple Choice

a. $18,200

b. $228,400

c. $76,000

d. $118,200

e. $57,800

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