ABC Company's management wants to determine if Division B should be eliminated. The

ABC Company's management wants to determine if Division B should be eliminated. The following data are available (in thousands):

Contribution Margin Income Statement Division

A Division B Division C Total

Sales $800 $800 1,028 $2,800

Less variable costs 560 500 720 1,780

Contribution margin $240 $300 $480 $1,020

Less direct fixed costs 140 340 240 720

Segment margin $100 ($40) $240 $ 300

Less common fixed costs 180 Operating income 120

A. Assuming all direct fixed costs of Division B are avoidable (traceable), what would be the change in operating income if Division B were eliminated?

B. Assuming one-half of the direct fixed costs of Division B are avoidable, what would be the change in operating income if Division B were eliminated?

C. If Division A’s sales increase $80,000, the over all company net income will be?

D. If a promotional program at Division A costing $25,000 increases sales by $80,000, Should they go with the promotional program?