Question
You manage many small teams of workers, but you are considering closing one office that employs only 5 workers. You are contractually committed to paying
You manage many small teams of workers, but you are considering closing one office that employs only 5 workers. You are contractually committed to paying rent in the office space for the next year, and your firm rents office space for $1,500 per month. A consultant informs you of the following: your company would save $3,000 per month per employee if you close, for a total of $15,000. Each employee contributes $3,200 to the company each month, for a total of $16,000. The consultant points out that your monthly revenues are $16,000, and your monthly costs are $15,000 in labor plus $1,500 in rent, for total costs of $16,500. You are therefore losing $500 each month and you should close this particular office. To maximize profits, you should
A. do not close the office this year if your other teams are profitable but close this office if others are losing money as well
B. close the office immediately
C .close the office this year because you would lose less money each month by closing (lose $500) than if you stay open (lose $1,500)
D. do not close the office this year because you would lose more money each month by closing (lose $1,500) than if you stay open (lose $500)
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