Question
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
- 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):
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| Department |
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| 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:
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| Department | Total | ||
| Particulars | X | Y | Z |
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| Sales |
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| Variable Cost: Direct Materials Direct Labor Direct Expenses |
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| Total Variable Cost |
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| Contribution |
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| Fixed cost |
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| Profit |
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College Accounting Chapters 1-30
Authors: John Price, M. David Haddock, Michael Farina
14th edition
978-1259284861, 1259284867, 77862392, 978-0077862398
