The company should accept the offer as it results in profit of $200,000.

Discontinued Segment or Operation

A company has an unprofitable division for the current year:

Sales	75,000
Cost of Goods Sold	50,000
Gross Profit	25,000
Selling and Admin	80,000
Income from operations	(55,000)

Fixed costs are 40% for cost of goods sold and variable costs are 60% of the selling and admin expenses. The Company assumes that fixed costs would not be affected if the division were discontinued. Using a differential analysis, determine if the division should be retained.