A division of a large company reports the information shown below for a recent year. Variable costs and direct fixed costs are avoidable, and 45% of the indirect fixed costs are avoidable. Based on this information, should the division be eliminated?

Sales	$	270,000
Variable costs		155,000
Fixed costs
Direct		40,000
Indirect		52,000
Operating loss	$	(23,000	)

1-a. Compare the amounts of total revenues and total avoidable expenses.

Revenues

Avoidable expenses

Revenues are greater than (less than) avoidable expenses by

1-b. Based on this information, should the division be eliminated?

multiple choice

• Yes

• No