Dakota Ltd. has two divisions with the following performance:

North South

Revenue $1,000,000 $800,000

Variable Costs $500,000 $600,000

Avoidable Fixed Costs $100,000 $100,000

Unavoidable Fixed Costs $100,000 $150,000

Operating Income $300,000 -$50,000

Based on the information above, should Dakota Ltd. drop the South Division?

• The company is indifferent between dropping the division or keeping the division
• No because operating income will decrease by $50,000
• No, because operating income for the company will decrease by $100,000
• Yes, because operating income for the company will increase by $50,000

Please answer with full solutions. Thank you!

Based on the information above, should Dakota Ltd. drop the South Division? - The company is indifferent between dropping the division or keeping the division - No because operating income will decrease by $50,000 - No, because operating income for the company will decrease by $100,000 - Yes, because operating income for the company will increase by $50,000