A company with its Head Office in Mumbai has two factors situated at station A and B. The data relating to the two factories are as under:

Factories	A	B
Contribution margin ratio	40%	50%
Traceable fixed costs	12,50,000	10,50,000
Sales	36,25,000	19,00,000

The Head Office expenses amount to Rs.2,00,000

Required:

1. Analyse the data and state which of the factories should be closed down.
2. If the factory which you have recommended for closure desires to continue operations, what increase in sales target is necessary to justify continuance.

Answer rating: 100% (QA)

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