DSQ Company Ltd, a diversified company, has three divisions, cement, fertilizers and

textiles. The summary of the companys profit is given below : {25 Marks }

(Rs/Crore)

Cement Fertilizer Textiles Total

Sales 20.0 12.0 18.0 50.0

Less : Variable Cost 8.0 9.6 5.4 23.0

Contribution 12.0 2.4 12.6 27.0

Less : Fixed Cost (allocated to

divisions in proportion to

volumes of Sales)

8.0 4.8 7.2 20.0

Profit (Loss) 4.0 (2.4) 5.4 7.0

After allocating the companys fixed overheads to products the Fertilizers, division incurs a loss of

Rs 2.4 crore. Should the company drop this division?