Shortflower Ltd currently publish, print and distribute a range of catalogues and instruction manuals. The management have now decided to discontinue printing and distribution and concentrate solely on publishing. Longplant ltd will print and distribute the range of catalogues and instruction manuals on behalf of Shortflower ltd commencing either at 30 June 1990 or 30 November 1990.

Long plant ltd will receive £65 000 per month for a contract which will commence either at 30 June 1990 or 30 November 1990.

The results of Shortflower Ltd for a typical month are as follows:

Other information has been gathered relating to the possible closure proposals:
(i) Two specialist staff from printing will be retained at their present salary of £1500 each per month in order to fulfil a link function with longplant ltd. One further staff member will be transferred to publishing to fill a staff vacancy through staff turnover, anticipated in July. This staff member will be paid at his present salary of £1400 per month which is £100 more than that of the staff member who is expec ted to leave. On closure all other printing and distribution staff will be made redundant and paid an average of two mon ths redundancy pay (ii) The printing department has a supply of materials (already paid for) which cost £18000 and which will be sold to longplant ltd for £10000 if closure takes place on 30 June 1990. Otherwise the material will be used as part of the July 1990 printing requirements. The distribution department has a contract to purchase pallets at a cost of £SOO per month for July and August 1990. A cancellation clause allows for non-delivery of the pallets for July and August for a one-off payment of £300. Non-delivery for August only will require a payment of £100. If the pallets are taken from the supplier longplant Ltd has agreed to purchase them at a price of £380 for each month's supply which is available. Pallet costs are included in the distribution material and supplies cost stated for a typical month.
(iii) Company expenditure on apportioned occupancy costs to printing and distribution will be reduced by 15% per month if pnnting and distribution departments are closed. At present, 30% of printing and 25% of distribution occupancy costs are directly attributable costs which are avoidable on closure. whilst the remainder are apportioned costs.
(iv) Closure of the printing and distribution departments will make it possible to sub-let part of the building for a monthly fee of £2500 when space is available.
(v) Printing plant and machinery has an estimated net book value of £48000 at 30 June 1990.11 is anticipated that it will be sold at a loss of £21 000 on 30 June 1990. If sold on 30 November 1990 the prospective buyer will pay £25 000.

(vi) The net book value of distribution vehicles at 30 June 1990 1s estimated as £80 000. They could be sold to the original supplier at £48000 on 30 June 1990. The original supplier would purchase the vehicles on 30 November 1990 for a price of £44000.
Required:
Using the above information, prepare a summary to show whether Short-flower Ltd should close the printing and distribution departments on finanCial grounds on 30 June 1990 or on 30 November 1990. Explanatory notes and calculations should be shown.
Ignore taxation.

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Publishing Printing Distribution (2000) (000) (000) Salaries and wages 28 18 4 Materiais and supplies 5.5 31 1.1 Occupancy costs 7 8.5 1.2 Depreciation 0.8 4.2 0.7