Carns Company Is Considering Eliminating Its Small Tools Division,which Reported

question 55

Multiple Choice

Carns Company is considering eliminating its small tools division,which reported an operating loss for the recent year of $85,000.Division sales for the year were $1,310,000 and its variable costs were $1,175,000.The fixed costs of the division were $220,000.If the kitchen division is dropped,45% of the fixed costs allocated it could be eliminated.The impact on Carns's operating income from eliminating the small tools division would be:

• A)$74,200 decrease
• B)$36,000 decrease
• C)$220,000 decrease
• D)$36,000 increase
• E)$99,000 decrease

---

Definitions:

Tetrapods

Tetrapods are a vertebrate group that includes all species with four limbs or limb-like appendages, including amphibians, reptiles, birds, and mammals.

Ancestors

Individuals from whom one is descended, especially those more remote than grandparents, often referring to earlier generations.

Limbs

The extremities or appendages of an organism that are typically used for locomotion, manipulation of the environment, or other functions.

Earth's Atmosphere

The layer of gases surrounding Earth, vital for life, retaining heat, and protecting organisms from ultraviolet solar radiation.