Nabob Corporation Is Considering Expanding into the Midwest

Essay

Nabob Corporation is considering expanding into the Midwest. It is estimated that this new division would generate an average of $378,000 in sales per year. The variable manufacturing costs would be $187,000, variable selling costs would be $72,000, and controllable fixed costs would be $90,000. In addition, the company planned to allocate $85,000 of company common fixed costs to the new division. Is this a wise decision for Nabob Corporation? Why?