To determine which department(s) should be closed, we need to calculate the contribution margin for each department. The contribution margin is calculated as sales revenue minus variable operating costs. First, let's calculate the variable operating costs for each department. The total fixed operating costs are $33,000, and they were allocated based on sales revenue. We'll use this allocation to determine the variable operating costs for each department: - Department A: Variable operating costs = Sales revenue - Fixed operating costs allocated = $21,600 - ($33,000 * ($21,600 / ($21,600 $90,000 $68,400))) - Department B: Variable operating costs = Sales revenue - Fixed operating costs allocated = $90,000 - ($33,000 * ($90,000 / ($21,600 $90,000 $68,400))) - Department C: Variable operating costs = Sales revenue - Fixed operating costs allocated = $68,400 - ($33,000 * ($68,400 / ($21,600 $90,000 $68,400))) Next, we calculate the contribution margin for each department: - Department A: Contribution margin = Sales revenue - Variable operating costs - Department B: Contribution margin = Sales revenue - Variable operating costs - Department C: Contribution margin = Sales revenue - Variable operating costs Finally, we compare the contribution margin of each department to their respective fixed operating costs