A company has three shops (R, S and T) to which the following budgeted information relates:

Sixty per cent of the total fixed costs are general company overheads. These are apportioned to the shops on the basis of sales value. The other fixed costs are specific to each shop and are avoidable if the shop closes down.
If shop S closed down and the sales of the other two shops remained unchanged, what would be the revised budgeted profit for the company?

(a) £50000

(b) £60000

(c) £70000

(d) £90000 (2 marks)
ACCA - Financial Information for Management

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Shop R Shop S Shop T Total 000 000 000 000 Sales 400 500 600 1500 Contribution 100 60 120 280 Less: Fixed costs (60) (70) (70) (200) Profit/loss 40 (10) 50 80