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Soar Incorporated is considering eliminating its mountain bike division, which reported an operating loss for the recent year of $3,900. The division sales for the year were $1,059,000 and the variable costs were $869,000. The fixed costs of the division were $202,000. 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:
$60,600 decrease
$129,400 decrease
$56,700 decrease
$190,000 increase
$190,000 decrease

Answer :

Tutorconsortium410go

The impact on operating income for eliminating this business segment would be $129,400 decrease.

What is operational income, exactly?

After deducting all operating costs and depreciation, a company's operating income is the adjusted revenue. Operational costs, often known as operating costs, are only the expenses incurred to maintain the operation of the business.

Comparing operational income and profit

The difference between a company's gross profit and operating profit, also known as operational income, is known as operating profit. The difference between revenue and a company's COGS, which generates the profit from manufacturing or core operations, is the gross profit.

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