Reference no: EM132502128

Klein Enterprises, which has three departments, recently reported the following results:

                                   A                    B                              C

Sales revenue  $12,000           $48,000                   $40,000

Less:

Operating costs 11,400            59,800                      50,500

Operating income (loss)$600         $(11,800)              $(10,500)

Question 1: The company incurred variable operating costs as well as $25,000 of fixed operating costs. The $25,000 amount was allocated to A, B, and C on the basis of sales revenue and is included in the cost figures noted above. Which department(s), if any, should be closed if none of the fixed operating costs can be avoided?

Group of answer choices

Department A.

Department B.

Department C.

Departments B and C.

None of the departments should be closed.