Diego Company manufactures one product that is sold for $73 perunit in two geographic regions—the East and West regions. Thefollowing information pertains to the company’s first year ofoperations in which it produced 44,000 units and sold 39,000units.

Variable costs per unit:
Manufacturing:
Direct materials	$	23
Direct labor	$	16
Variable manufacturingoverhead	$	2
Variable selling andadministrative	$	4
Fixed costs per year:
Fixed manufacturingoverhead	$	748,000
Fixed selling and administrativeexpense	$	400,000

The company sold 29,000 units in the East region and 10,000units in the West region. It determined that $180,000 of its fixedselling and administrative expense is traceable to the West region,$130,000 is traceable to the East region, and the remaining $90,000is a common fixed expense. The company will continue to incur thetotal amount of its fixed manufacturing overhead costs as long asit continues to produce any amount of its only product.

14. Diego is considering eliminating the West region because aninternally generated report suggests the region’s total grossmargin in the first year of operations was $30,000 less than itstraceable fixed selling and administrative expenses. Diego believesthat if it drops the West region, the East region's sales will growby 5% in Year 2. Using the contribution approach for analyzingsegment profitability and assuming all else remains constant inYear 2, what would be the profit impact of dropping the West regionin Year 2?