A recent accounting graduate from Lethbridge University evaluated the operating performance of Fane Company's three divisions. The following presentation was made to Fane’s Board of Directors. During the presentation, the accountant made the recommendation to eliminate the Southern Division stating that total net income would increase by $20,000, as shown in the analysis below.

                                       Other Two Divisions              Southern Division                  Total     

Sales                                       $1,000,000                           $300,000                     $1,300,000

Cost of Goods Sold                      650,000                           200,000                        850,000

Gross Profit                                  350,000                             100,000                          450,000

Operating Expenses                    100,000                           120,000                          220,000

Net Income                              $   250,000                           $ (20,000)                   $   230,000

Cost of goods sold is 80% variable and operating expenses are 70% variable. If the division is eliminated, 40% of the fixed costs will be eliminated.

Do you concur with the new accountant's recommendation? Present a schedule.

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