1. 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):

		Department
Particulars	X	Y	Z
Sales	2,240,000	1,120,000	1,680,000
Direct materials	280,000	140,000	280,000
Direct labour	112,000	140,000	448,000
Direct expenses	280,000	140,000	560,000
Fixed cost	560,000	280,000	560,000

The management of the company is considering closing down department 'Z'. There is a possibility of reducing fixed costs by $150,000 if department 'Z' is closed down. Advise the management whether or not department 'Z' should be closed down?

homework instructions:

	Department			Total
Particulars	X	Y	Z
Sales
Variable Cost: Direct Materials Direct Labor Direct Expenses
Total Variable Cost
Contribution
Fixed cost
Profit