Mesra Departmental store is located in Bandar Baru Nilai. The departmental store sells various products ranging from children clothes and toys to household goods. The forecast information for the coming year on the various department in the store is as follows: Department Sales revenue Household Adults Children Total $ $ $ $ 5,000 7,000 6,000 18,000 Less: variable production cost 1,500 2,000 2,200 5,700 Gross margin 3,500 5,000 3,800 12,300 Less: variable selling expenses 2,000 2,200 1,800 6,000 Contribution 1,500 2,800 2,000 6,300 Less: fixed expenses Fixed production cost Fixed selling expenses Net income/(loss) a. 3,000 1,000 2,300 There is a proposal from the management to close down the household department due to its profitability that is declining year by year. Advise whether this action should be taken. (Discussion should include the impact to the departmental store profit) b. The manager of the departmental store feels that the Household department should be replaced with the sports accessories department as the department store is located nearby colleges and universities. Therefore market for this type of goods is wider. The assistant manager of the departmental store has provided the cost and revenues for the sports accessories department for the coming year if it is set up. Department Sports accessories $ Sales revenue 5,000 Less: variable production cost 1,200 Gross margin 3,800 Less: variable selling expenses 1,000 Contribution 2,800 No additional fixed cost would be incurred. Should the household department be replaced with the sports accessories department