Granfield Company is considering eliminating its backpack division, which reported a loss for the recent year of $45,000 as shown below.

Segment Income (Loss)
Sales	$ 972,000
Variable costs	481,000
Contribution margin	491,000
Fixed costs	536,000
Income (loss)	$ (45,000)

If the backpack division is dropped, all $481,000 of its variable costs are avoidable, and $214,400 of its fixed costs are avoidable. The impact on Granfields income from eliminating this business segment would be:

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Multiple Choice

• $491,000 decrease

• $214,400 increase

• $276,600 decrease

• $491,000 increase

• $276,600 increase