The airline is presently offering its passengers to join in a club that entitles them to use the club facilities. The controller ascertained that all variable costs can be avoided if the club operation will be discontinued including some fixed costs: 1. Supervisors salaries $200,000 2. Airport fees 50,000 3. Depreciation on some equipment 100,000

A report showed a net loss from this department: Sales Revenue 2,000,000 Less: Variable Costs Food and beverages 700,000 Labor costs 400,000 Variable overhead 250,000 Contribution margin 650,000 Less: Fixed Expenses Depreciation on furniture & equipment 300,000 Supervisors salaries 200,000 Insurance 100,000 Airport fees 50,000 General overhead, allocated 100,000 Net loss (100,000)

What will be the decision of the airline company? Provide solutions to your answer using the total cost and differential approach.