Rice Corporation currently operates two divisions which had operating results for the year ended December 31,2012 as follows:

West Division Troy Division

Sales P600,000 P300,000

Variable costs 310,000 200,000

Contribution margin P290,000 P100,000

Fixed costs for the Division 110,000 70,000

Margin over direct costs P180,000 P30,000

Allocated common costs 90,000 45,000

Net income P90,000 (P15,000)

Since the Troy Division also sustained an operating loss during 2012, Rice's President is considering the elimination of this division. Assume that the Troy Division fixed costs could be avoided if the division were eliminated.

Required: (Support your answer with computations.)

Decide whether Troy Division should be eliminated or not.