The ABC Corporation has 2 divisions - east and west. The divisions have the following...
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Accounting
The ABC Corporation has 2 divisions - east and west. The divisions have the following revenues and expenses:
| East | West | |
| Sales | $720,000 | $350,000 |
| Variable costs | 370,000 | 240,000 |
| Traceable fixed costs | 130,000 | 80,000 |
| Allocated common corporate costs | 120,000 | 50,000 |
| Net operating income (loss) | $100,000 | -$20,000 |
Management is thinking of the elimination of the West division. If the west division were eliminated, its traceable fixed costs could be avoided. Total common corporate costs would be unaffected by this decision. Given these data, should the west division be eliminated? Why or why not? Show your work to support your decision.
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