Management of the Microwave Division of Technology, Inc., wants to know whether to continue operations in the division. The division has been operating at a loss for the past several years as indicated in the accompanying divisional income statement.

If the division is eliminated, corporate administration is not expected to change, nor are any other changes expected in the operations or costs of other divisions.

What costs are probably differential for the decision to discontinue this division's operations?

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TECHNOLOGY, INC., MICROWAVE DIVISION Divisional Income Statement For the Year Ending December 31 Sales revenue Costs: Advertising... Cost of goods sold Divisional administrative salaries Selling costs... Rent... Share of corporate administration Total costs ... Net loss before income tax benefit Tax benefit at 40% rate Net loss. $860,000 35,000 430,000 58,000 82,000 181,000 95,000 881,000 (21,000) 8,400 $(12,600)