Granfield Company is considering eliminating its backpack division, which reported a loss for the recent year of $48,000 as shown below.

Segment Income (Loss)
Sales	$ 984,000
Variable costs	487,000
Contribution margin	497,000
Fixed costs	545,000
Income (loss)	$ (48,000)

If the backpack division is dropped, all $487,000 of its variable costs are avoidable, and $218,000 of its fixed costs are avoidable. The impact on Granfields income from eliminating this business segment would be:

• $279,000 increase

• $279,000 decrease

• $218,000 increase

• $497,000 decrease

• $497,000 increase