Consider Knight Fashion from S8 5 Assume that the fixed expenses
Consider Knight Fashion from S8-5. Assume that the fixed expenses assigned to each department include only direct fixed costs of the department (rather than unavoidable fixed costs as given in S8-5):
In S
■ Salary of the department’s manager
■ Cost of advertising directly related to that department
If Knight Fashion drops a department, it will not incur these fixed expenses. Under these circumstances, should Knight Fashion drop any of the departments? Give your reason.
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