Burgabar Corporation owns and operates a range of fast food outlets throughout the East End of London. A summary of next year’s budget (before head office costs are taken into account) is given below:

The administrative head office of Burgabar Corporation is at Epping. Its running costs of £96,000 a year are apportioned to branches on the basis of sales revenue. Concern is being expressed about the West Ham branch as it is showing a loss (after head office costs have been deducted). One director has suggested that the branch is closed as soon as possible and a new branch opened, possibly in the Ilford area. However, it would take approximately 12 months to open a new branch. The closure of the West Ham branch would reduce head office costs by £10,000 p.a. with immediate effect. Also, although West Ham’s salaries and wages bill would disappear immediately, redundancy pay of £8,000 would be payable.

Task:Advise the directors of Burgabar Corporation.