Granfield Company is considering eliminating its backpack division, which reported a loss for the recent year of $43,000 as shown below. Segment Income (Loss)

Sales$ 964,000

Variable costs $477,000

Contribution margin $487,000

Fixed costs $530,000

Income (loss)$ (43,000)

If the backpack division is dropped, all $477,000 of its variable costs are avoidable, and $212,000 of its fixed costs are avoidable. The impact on Granfields income from eliminating this business segment would be:

Multiple Choice

$487,000 increase

$275,000 increase

$275,000 decrease

$487,000 decrease

$212,000 increase