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Calgary Corporation Is Closing One of Its Divisions  Sales $80,000 Variable costs 40,000 Overhead 40,000\begin{array} { l r } \text { Sales } & \$ 80,000 \\\text { Variable costs } & 40,000 \\\text { Overhead } & 40,000\end{array}

question 82

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Calgary Corporation is closing one of its divisions. Operating data on this division follows:  Sales $80,000 Variable costs 40,000 Overhead 40,000\begin{array} { l r } \text { Sales } & \$ 80,000 \\\text { Variable costs } & 40,000 \\\text { Overhead } & 40,000\end{array} Overhead consists of $30,000 in salary and $10,000 for rent and insurance. The salary is for the chief engineer, who will continue to work for Calgary even if the division is closed.
Assuming all overhead costs continue to be incurred even if the division closes, what will be the effect on overall company profits of closing the division?


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