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Kentucky Distributors has two divisions Northern and Southern. The divisions have provided the ...

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Kentucky Distributors has two divisions Northern and Southern. The divisions have provided the ...

Kentucky Distributors has two divisions — Northern and Southern. The divisions have provided the following financial information:

Northern

Southern

Sales	$150,000	$210,000
Variable costs	95,000	110,000
Common fixed costs	65,000	75,000
Operating income	($ 10,000)	$ 25,000

Kentucky's executives are considering the elimination of the Northern division. If the division is eliminated, the common fixed costs will remain unchanged. Given these data, should the Northern division be eliminated? Why?

Textbook

Managerial Accounting

Edition: 4^th

Author: Davis

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