The operations of Plastics Ltd. are divided into the Blow Moulding Division and the Injection Moulding Division. Projections for the next year are as follows:

Blue Moulding Division Injection Moulding Division Total Sales $60,000 $40,000 $100,000 Variable Costs 20,000 15,000 35,000 Contribution Margin $40,000 $25,000 $65,000 Direct Fixed Costs 12,500 30,000 42,500 Segment Margin 27,500 (5,000) 22,500 Allocated Common Costs 10,000 7,500 17,500 Net Operating Income (Loss) $17,500 $(12,500 $5,000

Required:

A. Determine the operating income for Plastics Ltd. as a whole if the Injection Moulding Division is dropped.

B. Should the Injection Moulding Division be eliminated? What is the financial impact of this decision?