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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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