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17 Children's Retail Ltd is considering closing one of its divisions - the Apparel Division. Operations data for this division are as follows: Apparel Division:
17 Children's Retail Ltd is considering closing one of its divisions - the Apparel Division. Operations data for this division are as follows: Apparel Division: Sales $ 700,000 Variable costs $ 500,000 Overhead $ 220,000 Overhead includes the salaries of experienced purchasing executives. If the Apparel Division is closed, all the purchasing executives in Apparel, will continue to work for the company at the Furniture Division. However, if the Apparel Division continues operating, the Furniture Department would need to hire experienced purchasing executives externally from the labour market. With respect to the decision whether to close the Apparel Division (or not), salaries of the purchasing executives are most suitably classified as: A relevant cost An engineered cost An irrelevant cost An inventoriable cost An opportunity cost
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