West Star Bus Company Bhd. (the company) provides bus services for the North-South route and the East-West route.

Scenario 1

Assume that the contract with the government is such that the company has the option to run either the North-South route or the East-West route or both the routes.

Scenario 2

Assume that the contract with the government is such that the company must run both the North-South route and the East-West route.

Required:

1. Explain is each bus route a cash-generating unit.

1. Scenario 1

(2 marks)

2. Scenario 2

(2 marks)