Valdez Company is considering eliminating its kitchen divisi…
Valdez Company is considering eliminating its kitchen division, which reported an operating loss of $63,000 for the past year as shown below. Segment Income (Loss) Sales $ 1,240,000 Variable costs 924,000 Contribution margin 316,000 Fixed costs 379,000 Income (loss) $ (63,000) If the kitchen division is dropped, all $924,000 of its variable costs are avoidable, and $227,400 of its fixed costs are avoidable. The impact on Valdez’s income from eliminating this business segment would be: