Question
The operating results ofValor Company by division for the current year are summarized below.Unavoidable company headquarter's cost of 1,540,000 included in the total costs have
The operating results ofValor Company by division for the current year are summarized below.Unavoidable company headquarter's cost of 1,540,000 included in the total costs have been distributed to the divisions on the basis of sales revenue.The remaining portion of the total costs have been incurred at the divisional level and can be avoided if a division is shut down.
Valor Company
Operating Results
Year ended Nov. 30, 2016
TotalNorthSouthEastWest
Sales revenue6,600,000990,000 2,640,000990,000 1,980,000
Total costs6,226,000572,000 2,090,0001,276,0002,288,000
Profit/Loss374,000 418,000 550,000(286,000)(308,000)
What divisions of Valor Company that should be shutdown due to failure to cover divisional cost?
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