Baldwin Division earns a contribution margin of $200,000 and has a division margin of $70,000. If Baldwin Division is closed, the firm can eliminate all of the direct division expenses and $110,000 of common expenses. These facts indicate that closing the division will cause the firm's operating income to:
Increase by $90,000.
Decrease by $90,000.
Increase by $40,000.
Decrease by $40,000.
The direct expenses for Baldwin Division are ...
The solution explains the effect on operating income of closing a division.