Question
XYZ Limited, an assembling organization has three divisions: X, Y and Z. The organization's all divisions are not performing great. Organization needs to assess the
XYZ Limited, an assembling organization has three divisions: X, Y and Z. The organization's all divisions are not performing great. Organization needs to assess the expected conclusion of division "L". The expense and income data is given underneath:
Division X and Y (`) Division L (`) Total (`)
Sales 1,70,000 24,000 1,94,000
Variable Cost 88,400 14,400 1,02,800
Contribution Margin 81,600 9,600 91,200
Traceable Fixed Cost 66,000 12,200 78,200
Divisional Profit 15,600 -2,600 13,000
Un-allocated fixed cost 5,000
Income before tax 8,000
:
Ascertain the expansion or abatement in the benefit after conclusion of division L if all recognizable fixed expense of division L are avoidable. Should the division L be shut?
Expect that detectable fixed expense of division "L" having half of staff pay can be reassigned to different divisions. What is the impact of conclusion of division L with this presumption?
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