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b) MODERN LTD. has three departments X, Y and Z, each of which makes a different product. The budgeted data for the coming year
b) MODERN LTD. has three departments X, Y and Z, each of which makes a different product. The budgeted data for the coming year are as follows (USD): Particulars Sales Direct materials Direct labour Direct expenses Fixed cost Department X Y Z 2,240,000 1,120,000 1,680,000 280,000 140,000 280,000 112,000 140,000 448,000 280,000 140,000 560,000 560,000 280,000 560,000 The management of the company is considering closing down department 'Z'. There is a possibility of reducing fixed cost by $150,000 if department 'Z' is closed down. Advise the management whether or not department 'Z' should be closed down?
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