REQUIRED:

A. Calculate the increase or decrease in operating income if Brentford closes Alpha. Explain whether Brentford should close Alpha.

B. Calculate the increase or decrease in operating income if Brentford closes Bravo. Explain whether Brentford should close Bravo.

C. What other factors should top management of Brentford consider before deciding to close either Alpha or Bravo?

Brentford Corporation has four operating divisions. The budgeted revenues and expenses for each division for 2021 follows: Further analysis of costs reveals the following percentages of variable costs in each division: Closing down any division would result in savings of 40% of the fixed costs of that division. Top management is very concerned about the unprofitable divisions (Alpha and Bravo) and is considering closing them for the year