Carns company is considering eliminating its small tools division, which reported an operating loss for the recent year of $85,000. division sales for the year were $1,310,000 and its variable costs were $1,175,000. the fixed costs of the division were $220,000. if the kitchen division is dropped, 45% of the fixed costs allocated it could be eliminated. the impact on carns’s operating income from eliminating the small tools division would be:

a. $74,200 decrease
b. $36,000 decrease
c. $220,000 decrease
d. $36,000 increase
e. $99.000 decrease

Magic realm, inc., has developed a new fantasy board game. the company sold 15,000 games last year at a selling price of $20 per game. fixed expenses associated with the game total $182,000 per year, and variable expenses are $6 per game. production of the game is entrusted to a printing contractor. variable expenses consist mostly of payments to this contractor.required: 1-a. prepare a contribution format income statement for the game last year.1-b. compute the degree of operating leverage.2. management is confident that the company can sell 58,880 games next year (an increase of 12,880 games, or 28%, over last year). given this assumption: a. what is the expected percentage increase in net operating income for next year? b. what is the expected amount of net operating income for next year? (do not prepare an income statement; use the degree of operating leverage to compute your answer.)