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