Problem 1

X corp has Division A, and reported the following data for the whole year 2020:

Amount Sales 2,500,000 Variable cost 1,000,000 Less; FC Salaries 750,000 Insurance cost of Division A 50,000 Depreciation on Building 325,000 Advertising of Division A 500,000 1,625,000 Net Loss (125,000) The management is contemplating on dropping the Division due to net kiss. If this would happen, one employee will be retained with monthly salary of 12,500. The Building has no resale value. Division A should be