Management of the Calculator Division of Huey Packard 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.

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

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HUEY PACKARD CALCULATOR DIVISION Divisional Income Statement For the Year Ending December 31 Sales revenue $850,000 Costs: Advertising 35,000 Cost of goods sold 420,000 Divisional administrative salaries 59,000 Selling costs 82,000 Divisional share of building occupancy costs 181,000 Share of corporate administration 96,000 Total costs 873,000 Net loss before income tax benefit (23,000) Tax benefit at 40% rate Net loss 9,200 $ (13,800)