Manuel Inc. produces textiles in many different forms. After recording lower than anticipated profits last year, Manuel has decided to shut down one of its divisions that is not performing well. The accounting manager has compiled the following data on the two divisions being considered for closing and has asked you to evaluate the short-term and long-term effects on profits of closing each division.

Which division should be closed if Manuel is most concerned with increasing long-run profits?

a. Winter Outerwear

b. High-End Suits

c. Closing either would have the same impact on long-run profits.

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Winter Outerwear HIgh-End Sults $1,000,000 $5,000,000 Net revenues 500,000 Varlable costs 2,000,000 Contribution margin 500,000 3,000,000 Controllable fixed costs 2,000,000 Controllable margin 500,000 1,000,000 750,000 Noncontrollable flxed costs 1,500,000 $ (250,000) $ (500,000) Contributlon by divislon