Freeman Company has five divisions, and you are the division manager of one of these divisions. Assume that the Administrative Costs for Freeman Company represent corporate-sustaining fixed costs that are allocated to each division based on the divisions total assets. These costs represent long term commitments that cannot be changed within the next two years. Freeman Company decides to shut-down on of the other divisions (not your division) and dispose of the shut-down divisions assets. A. (6 points) How would this decision affect your divisions profits? Make sure you explain your logic. Your profits will go down not because you are selling or making less, but because more fixed costs are being allocated between 4 divisions instead of 5 divisions. All active divisions now are encumbered with the fixed cost that was assigned to the shutdown division. B. (6 points) Describe how your answer to Part A relates to the interdependency problem of motivating performance. Interdependency is the part of the performance measure that depends on others. Basing administrative costs on a divisions total assets encourages collaboration among divisions to make sure their co-divisions do not get shut down. The potential for free riding is also significant because divisions with fewer assets have an advantage to those with larger assets. A division has an incentive to stay small to avoid larger administrative costs. C. (6 points) Describe how your answer to Part A relates to the death spiral phenomenon. The Death Spiral makes profit seem unprofitable because of bad accounting. If the management of Freeman Company were to discontinue a product line or increase a products prices because they thought the division was not profitable, it would be a mistake because their decrease in profits is due to the shutdown of another division,