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A The Cook Company has two divisions : Eastern and Western . The divisions have the following revenues and expenses Sales Variable costs Direct fixed

A The Cook Company has two divisions : Eastern and Western . The divisions have the following revenues and expenses Sales Variable costs Direct fixed costs Allocated corporate costs Operating income ( loss ) Eastern $ 550,000 $ 275,000 $ 180,000 $ 170,000 $ 75,000 Western $ 500,000 $ 200,000 $ 150,000 underline >135,000 $ 15,000 Management is considering dropping the Eastern Division and operating only out of the Western Division costs could be avoided . Western Division sales are expected to decrease by 5% if the Eastern dropped and alloc be reduced by $ 120,000 as one senior manager would have to be let go . uired : the Eastern Division be dropped ? Show all supporting calculations .(5 marks ) You may not need to use all the green and blue highlighted cells .

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