Nicole Filippas, a recent graduate of Rollings University's accounting program, evaluated the operating performance of Poway Company's six divisions. Nicole made the following presentation to Poway's board of directors and suggested the Erie division be eliminated. "If the Erie division is eliminated," she said, "our total profits would increase by $23,870."

In the Erie division, the cost of goods sold is $70,000 variable and $6,470 fixed, and operating expenses are $15,000 variable and $28,600 fixed. None of the Erie division's fixed costs will be eliminated if the division is discontinued.
Instructions
Is Nicole right about eliminating the Erie Division? Prepare a schedule to support your answer.

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The Other Five Divisions Erie Division Sales Cost of goods sold Gross profit Operating expenses Net income $1,664,200 978,520 685,680 527,940 $157,740 $ 96,200 76,470 19,730 43,600 $ (23,870 Total $1,760,400 1,054,990 705,410 571,540 $ 133,870