One of Gold Empire Ltd’s four departments has reported a loss of $80 000 after deducting $204 000 of expenses. Assume that only $130 000 of the expenses can be eliminated if the department is discontinued.

Required

(a) Should the business keep operating the department reporting the loss when these facts only are considered? Explain.

(b) Will the performance of the three other departments ever be considered in the decision to eliminate this department? Explain.