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Question - You are provided with the following information relating to four different departments in a business. The four departments are in the same building, for which the business has signed a long-term lease.
Department A
Department B
Department C
Department D
Revenue
£100,000
£120,000
£60,000
£80,000
Costs
(£50,000)
(£80,000)
(£90,000)
Profit/Loss
£50,000
£40,000
(£20,000)
(£10,000)
The business is thinking of closing one of the departments to save costs. Assume that the business's fixed costs of £100,000 are spread evenly among the cost figures of the four departments. Which department should the business shut down?
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