Solution-What other variables should be included in the

What other variables should be included in the decision

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Reference no: EM131768129

Problem - In a belt-tightening measure, the Sandalwood Company is taking a close look at its four divisions with an eye toward closing any unprofitable ones.

Costs incurred at the corporate headquarters level have been distributed to each division in proportion to sales revenue. All costs incurred by each division except the allocated corporate headquarters costs are considered to be avoidable if a division is shut down. The corporate headquarters costs amount to $975,000.

The following data represent the semi-annual results:

		Divisions ($000's)
	Total	Northgate	Edgewood	Weston	Southboro
Sales	$3,800	1,520	570	1,140	570
Costs	3,650	1,225	380	1,685	360
Profits(losses)	$150	295	190	-545	210

Required:

a) Based on the above information, what recommendations would you make concerning possible division closings? Show all calculations.

b) Since the above data represent semi-annual information, what other variables should be included in the decision to close down a division?

Reference no: EM131768129

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What other variables should be included in the decision

Reference no: EM131768129

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