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DSQ Company Ltd, a diversified company, has three divisions, cement, fertilizers and textiles. The summary of the company's profit is given below : (Rs/Crore)
Cement Fertilizer Textiles TotalSales 20.0 12.0 18.0 50.0Less : Variable Cost 8.0 9.6 5.4 23.0Contribution 12.0 2.4 12.6 27.0Less : Fixed Cost (allocated todivisions in proportion tovolumes of Sales)8.0 4.8 7.2 20.0Profit (Loss) 4.0 (2.4) 5.4 7.0
After allocating the company's fixed overheads to products the Fertilizers, division incurs a loss of Rs 2.4 crore. Should the company drop this division?
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