Soar Incorporated Is Considering Eliminating Its Mountain Bike Division,which Reported

question 96

Multiple Choice

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)$57,900 decrease
• B)$132,100 decrease
• C)$54,900 decrease
• D)$190,000 increase
• E)$190,000 decrease

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Definitions:

Brachioradialis

A muscle of the forearm that flexes the forearm at the elbow.

Biceps Brachii

A muscle of the upper arm that flexes the elbow and rotates the forearm, consisting of two heads (long and short) originating from the shoulder and attaching to the forearm.

Flexor Carpi Ulnaris

A muscle of the forearm that acts to flex and adduct the wrist.

Metacarpal Bones

The five long bones in the hand that are connected to the carpals (wrist bones) and the phalanges (fingers).