Valdez Company is considering eliminating its kitchen division, which reported an operating loss of $55,000 for...

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Valdez Company is considering eliminating its kitchen division, which reported an operating loss of $55,000 for the past year as shown below. Segment Income (Loss) Sales Variable costs $ 1,080,000 805,000 Contribution margin 275,000 Fixed costs 330,000 Income (loss) $ (55,000) If the kitchen division is dropped, all $805,000 of its variable costs are avoidable, $198,000 of its fixed costs are avoidable. The impact on Valdez's income from eliminating this business segment would be: $285,000 decrease $77,000 increase $77,000 decrease $275,000 decrease $275,000 increase Valdez Company is considering eliminating its kitchen division, which reported an operating loss of $55,000 for the past year as shown below. Segment Income (Loss) Sales Variable costs $ 1,080,000 805,000 Contribution margin 275,000 Fixed costs 330,000 Income (loss) $ (55,000) If the kitchen division is dropped, all $805,000 of its variable costs are avoidable, $198,000 of its fixed costs are avoidable. The impact on Valdez's income from eliminating this business segment would be: $285,000 decrease $77,000 increase $77,000 decrease $275,000 decrease $275,000 increase