The Kelso Company Has Two Divisions--Eastern and Western Management of Kelso Is Considering the Elimination of the Eastern

Multiple Choice

The Kelso Company has two divisions--Eastern and Western. The divisions have the following revenues and expenses: $\begin{array}{l}&\text { Eastem }&\text { Westem }\\\text {Sales. }&£ 450,000 & £ 400,000 \\\text {Variable expenses }&225,000 & 150,000 \\\text { Traceable fixed expenses.}&130,000 & 105,000 \\\text {Allocated common corporate expenses. }&120,000 & 95,000 \\\text { Net operating income (loss) .}&£(25,000) &£ 50,000\end{array}$
Management of Kelso is considering the elimination of the Eastern Division. If the Eastern Division were eliminated, its traceable fixed expenses could be avoided. The total common corporate expenses would be unaffected. Given these data, the elimination of the Eastern Division would result in an overall company net operating income (loss) of

A) £50,000.
B) (£70,000) .
C) £25,000.
D) (£75,000) .