Yvan Kabenga, President of Kabenga Limited is considering starting a new division to Kabenga's Canadian operations.He is reviewing the projected financial statements for the proposed Cape Breton Division. The financial statement and additional information is presented below:

Cape Breton Division

Projected Income Statement

Year Ending June 30, 2022

Sales $800,000

Variable expense 450,000

Contribution margin 350,000

Depreciation expense (1) 40,000

Property tax expense (1) 30,000

Administrative expenses (2) 80,000

Salary expense (3) 150,000

Advertising expense (4) 60,000

Overhead expense (5) 45,000

Utilities expense (3) 38,000

Net loss $(93,000)

(1) Relates to a new building and equipment required to start the new Division.

(2) 30% relates directly to administration at the Cape Breton Division with the 70% remainder being allocated from Head Office.

(3) Relates 100% to the Cape Breton Division.

(4) 40% is advertising for the Cape Breton Division and the remaining portion is allocated from Head Office.

(5)100% allocated from Head Office.

Required:

Should the Cape Breton Division be opened?