The Party Zone is trying to decide whether or not to continue its costume segment. The information shown is available for Party Supply’s business segments. Assume that neither the Direct fixed costs nor the Allocated common fixed costs may be eliminated, but will be allocated to the two remaining segments.

If costumes are dropped, what change will occur to profit?

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Sales Variable costs Contribution margin Direct fixed costs Allocated common fixed costs Net income Costumes $160,000 94,000 66,000 50,000 20,000 $ (4,000) Party Supplies $112,000 52,000 60,000 22,000 27,000 $ 11,000 Floral Decorations $215,000 125,000 90,000 28,000 32,000 $ 30,000