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Hot Doggy Dogg has three divisions. Revenues, variable costs, and fixed costs for each division are presented below. Hot Doggy Dogg is thinking of shutting

Hot Doggy Dogg has three divisions. Revenues, variable costs, and fixed costs for each division are presented below. Hot Doggy Dogg is thinking of shutting down the Relish division, since it is unprofitable, and has been so for the past five years.

Hot Dogs Buns Relish
Revenue $7,500,000 5,200,000 $1,400,000
Variable Costs 750,000 1,000,000 820,000
Fixed Cost 4,200,000 2,300,000 750,000
Profit $2,550,000 $1,900,000 $(170,000)

If the Relish division is shut down, all its fixed costs will be avoidable except $80,000 in allocated corporate costs. Also, hot dog and bun sales will decline by 1% if the Relish division is shut down, since some customers will not eat hot dogs if they cannot buy Hot Doggy Doggs relish.

Find the net benefit of the decision.

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