A boutique has three departments in the same premises. These departments occupy roughly equal sized areas...

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A boutique has three departments in the same premises. These departments occupy roughly equal sized areas of the premises so the fixed cost has been equally shared between them. Results for the past year show the following: TOTAL Footwear Accessories Prom Clothes £'000 £'000 £'000 Sales 210 75 35 Variable Costs 55 20 10 Fixed Costs 105 35 35 Profit / (Loss) 50 20 (10) The Managing Director wants to close the Accessories department because it is making a loss. Use whatever figures you feel are appropriate to support his argument or disagree with it. State any circumstances in which you would change your decision. £'000 100 25 35 40 A boutique has three departments in the same premises. These departments occupy roughly equal sized areas of the premises so the fixed cost has been equally shared between them. Results for the past year show the following: TOTAL Footwear Accessories Prom Clothes £'000 £'000 £'000 Sales 210 75 35 Variable Costs 55 20 10 Fixed Costs 105 35 35 Profit / (Loss) 50 20 (10) The Managing Director wants to close the Accessories department because it is making a loss. Use whatever figures you feel are appropriate to support his argument or disagree with it. State any circumstances in which you would change your decision. £'000 100 25 35 40

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To assess whether the managing directors decision to close the accessories department is justified w... View the full answer