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Brunson Corp. has seven divisions, five of which are running profitably. Divisions 1 and 2 are running at a loss, and Brunson's management is considering

Brunson Corp. has seven divisions, five of which are running profitably. Divisions 1 and 2 are running at a loss, and Brunson's management is considering closing one or both of them. Relevant data for both divisions is as follows:

Division 1 Division 2
Sales revenue $704,900 $803,900
Variable costs 267,800 334,200
Fixed costs 595,500 636,500
Avoidable fixed costs 65% 69%

Avoidable fixed costs represents the percentage of each division's fixed costs that are specific to that division, and will no longer be incurred if the division is eliminated. All other fixed costs are allocated fixed costs that will be borne by the remaining divisions if any divisions are closed.

What should Brunson's management do?

Enter 1 if Division 1 should be closed.

Enter 2 if Division 2 should be closed.

Enter 3 if both divisions should be closed.

Enter 4 if neither division should be closed.

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