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A company currently operates two stores, Uptown and Midtown: Last years results Uptown Midtown Sales revenues $300,000 $400,000 Variable costs (120,000) (140,000) Contribution margin $180,000 $260,000 Store related fixed costs (100,000) (100,000) Allocated common fixed costs (90,000) (120,000) Operating income (loss) ($10,000) $40,000 The company is considering closing the Uptown store because of its sustained operating losses during the last two years. It is estimated that all of store related and 20% of common fixed costs allocated to Uptown can be avoided if the Uptown store is closed. What would be the effect on total operating income for last year if the Uptown store had been closed before Jan 1st? a) It would increase by $40,000 b) It would decrease by $62,000 c) It would increase by $8,000. d) It would increase by $118,000.

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