Sales Variable Costs Contribution Margin Fixed costs Net income (loss)

Continue Eliminate $100,000 $0 85,000 0 15,000 0 39,500 39,500 ($24,500) ($39,500)

Net Income ($100,000) 85,000 (185,000) 0 ($185,000)

From my calculations, it looks to me that if Poway Company continues with the Erie Division, there will be a loss of $24,500 but there will also be a loss if the Erie Division was eliminated. So, I think it is up to Poway Company whic they would want to take.

vision, there will be a loss of up to Poway Company which risk