The company accountant at Spike Transport Company reported the following information for the most recent operating period:

Required 

(a) The company owner, Spike Potruff is tired of the continuing losses being reported for the Transport Division. What is the effect on Spike Transport Company’s operating income if the Transport Division is dropped? 

(b) Ellen Potruff, the operating manager, believes that if the Transport Division is shut down, customers will ship some of the items formerly carried by the Transport Division to the Bus Division and the Taxi Division. Sales in the Bus Division will increase by 15%, and sales in the Taxi Division will increase by 10%. What is the effect on Spike Transport Company’s operating income if the Transport Division is dropped?

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Sales.... Variable costs Fuel...... Labor... Other supplies.. Contribution margin Fixed costs Avoidable fixed costs .... Allocated company fixed overhead... Profit.... ..... Bus DIVISION TAXI DIVISION TRANSPORT DIVISION TOTAL $17,000,000 $2,600,000 $11,000,000 $30,600,000 $9,350,000 $1,040,000 $5,610,000 $16,000,000 546,000 2,200,000 3,740,000 408,000 6,486,000 685,200 57,200 220,000 $ 3,502,000 $ 956,800 $ 2,970,000 $ 7,428,800 $1,500,000 $ 456,000 1,677,670 273,786 $324,330 $ 227,014 $ 2,350,000 1,048,544 $ (428,544) $ 4,306,000 3,000,000 122,800 $