Assume that Corel had a "Games" division in 2012. It had been set up in 1990 with a mandate to develop software for computer games. It has not been doing well over the past few years. Financial results for this division are as follows:

Year to: 30/11/2012 30/11/2011 30/11/2010

Sales revenues $1,500,000 $1,600,000 $1,400,000

Direct costs (all salaries) 1,100,000 1,000,000 850,000

Overhead (allocated fixed costs) 550,000 500,000 425,000

Division profit/loss $ 150,000 $ 100,000 $ 100,000

Corporate fixed costs are allocated to all operating units of the basis of 50% of direct costs. The direct costs include a performance bonus equal to 10% of sales revenues.

You are told that the increase in direct costs is entirely due to increased rates of pay: there has been no increase in head count in this division for 5 years.

Required:

1: If the division were eliminated, half the employees could be transferred to other operating units, at similar rates of pay and seniority. The other half would have to be let go, with a severance package equal to 20% of their annual salary. Product revenues would dry up immediately. What would be the dollar effect of closing this division?