Freemen Company's Western Territory's Forecasted Income Statement for the Upcoming

Freemen Company's western territory's forecasted income statement for the upcoming year is as follows:
$$\begin{array} { | l | r | } \hline \text { Sales revenue } & \$ 800,000 \\\hline \text { Variable costs } & \underline { 500,000 } \\\hline \text { Contribution margin } & \$ 300,000 \\\hline \text { Fixed costs } & \underline { 496,000 } \\\hline \text { Operating income (loss) } & \$ ( 196,000 \\\hline\end{array}$$ Freemen Company's management is considering dropping the western territory.This move would be financially advantageous only if the company could eliminate $196,000 of fixed cost.