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10 points acts and circumstances: Your boss shows the following periodic profitability analysis of the four sales offices to you and asks you whether the
10 points acts and circumstances: Your boss shows the following periodic profitability analysis of the four sales offices to you and asks you whether the GHI office should be closed. Your answer is that first a special study should be done by the marketing team, whether all the sales of the GHI office would be lost to competitors or whether some sales could be retained and effected from the other three sales offices. Furthermore, you suggest finding out which part of the total fixed cost of GHI could be avoided after the closure of that office. Sales Variable Costs Fixed Costs Profit (Loss) ABC DEF GHI JKL Total 000 000 000 000 000 900 800 800 900 3400 -300 -350 -400 -450 -1500 -250 -200 -650 -400 -1500 350 250 -250 50 400 A week later the special study indicates that 20% of the GHI sales can be done out of the other three sales offices and 320 (000 ) of the fixed costs of GHI could be avoide if GHI will be closed. Required: What would you suggest to management? Discontinue GHI 000 Keep GHI open 000
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