Encik Adam, the owner of Daily Cafe is not happy with the financial performance of his company. The company operates at 3 branches, Selayang, Rawang and Gombak. Recently, the branch in Selayang and Gombak are making profits however Rawang branch incurred losses as shown below: Selayang RM 345,000 134,750 210,250 Rawang RM 60,000 20,000 40,000 Gombak RM 120,000 37,000 83,000 Sales Less : Variable cost Contribution margin Less : Fixed cost Staff salary General expenses Miscellaneous Manager's salary Net profit 38,800 19,342 10,000 20,000 38,108 24,400 3,553 4,800 12,000 (4,753) 32,600 7,105 6,000 12,000 25,295 Encik Adam is considering to close down the cafe at Rawang and to concentrate operating the cafe in Selayang and Gombak. He has appointed you as consultant to provide all relevant information before he decides to close down the cafe. The following information is available if the cafe in Rawang is close down. 1. The production and sales in Selayang and Gombak are expected to increase by 25% and 30% respectively if the cafe in Rawang is closed down. 2. All the three workers in Rawang will be laid off but they will paid three months' salary as redundancy payment. 3. The general expenses are allocated based on sales revenue. If the cafe in Rawang is to closed down, 25% of the total general expenses could be avoided. 4. 75% of the cafe miscellaneous in Rawang is avoidable. The rest will be absorbed by the cafe in Selayang (60%) and Gombak (40%). The miscellaneous expenses in Selayang and Gombak will be increased by 15% and 10% respectively. 5. The manager of cafe in Rawang will be transferred out to Gombak. Required: a. Advise Encik Adam whether the cafe in Rawang should be closed down or not. b. Discuss the qualitative factors to be considered in deciding whether to continue or to close down the cafe in Rawang