s Sales Mess: variable costs Contribution Rent and rates My Conditioning and Light)) Xngurance Men's 40,000 20,000 20,000 4,0014 5,000 5.000 4,500) 2.000 (500) (all figures are in ) Ladies Children 60,000 70,000 36,000 15,000 24,000 55,000 4,000 4,000 6,000 7.000 5,000 7,000 4,500 4,500 2,000 2,000 2,500 30,500 Totel 0.000 71.000 99.98 2,20 TETOD 13.05 13 6 (G, RO 26,500 Allocated Store Costs Head Office Management Cost Profit The Managing Director is considering closing the Men's division as this division does not appear to have been profitable in the last five years The following information is available: The rent and rates is an allocation across the three divisions. If the Men's division was closed there would be noverall saving on this cost) If the Men's division was closed then 30%) of the total Air Conditioning and Light per month would be saved T'he insurance company has stated that they would be willing to reduce the Total Insurance bill by(150) of the total cxisting cost if the Men's division were to close Store Costs are an allocation of the existing store costs that would not be affected by closing the Men's One member of staff in the head office would be made redundant as a result of this decision. This would save the business (1,500 per month. One-off legal fees or can would be incurred.net One customer that currently buys men's and children's clothes has indicated that they would terminate their entire contract with No e l'ashion if the Men's Division was closed. Sales of children's wear to this customer make a contribution of 13,50 per month Required: Opportunity cost (a) Using relevant costing analysis, recommend whether the Men's division show be closed. ) State and justify how you have treated each item in your analysis above and exp in any assumptions you have made. dirision. (c) Discuss any additional factors that would need to be considered s Sales Mess: variable costs Contribution Rent and rates My Conditioning and Light)) Xngurance Men's 40,000 20,000 20,000 4,0014 5,000 5.000 4,500) 2.000 (500) (all figures are in ) Ladies Children 60,000 70,000 36,000 15,000 24,000 55,000 4,000 4,000 6,000 7.000 5,000 7,000 4,500 4,500 2,000 2,000 2,500 30,500 Totel 0.000 71.000 99.98 2,20 TETOD 13.05 13 6 (G, RO 26,500 Allocated Store Costs Head Office Management Cost Profit The Managing Director is considering closing the Men's division as this division does not appear to have been profitable in the last five years The following information is available: The rent and rates is an allocation across the three divisions. If the Men's division was closed there would be noverall saving on this cost) If the Men's division was closed then 30%) of the total Air Conditioning and Light per month would be saved T'he insurance company has stated that they would be willing to reduce the Total Insurance bill by(150) of the total cxisting cost if the Men's division were to close Store Costs are an allocation of the existing store costs that would not be affected by closing the Men's One member of staff in the head office would be made redundant as a result of this decision. This would save the business (1,500 per month. One-off legal fees or can would be incurred.net One customer that currently buys men's and children's clothes has indicated that they would terminate their entire contract with No e l'ashion if the Men's Division was closed. Sales of children's wear to this customer make a contribution of 13,50 per month Required: Opportunity cost (a) Using relevant costing analysis, recommend whether the Men's division show be closed. ) State and justify how you have treated each item in your analysis above and exp in any assumptions you have made. dirision. (c) Discuss any additional factors that would need to be considered