Brief Exercise $18-23($Static$)$ Manuel Incorporated produces textiles... $[$LO $18-4]$

Manuel Incorporated 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.

$$Winter OuterwearHigh$-$End SuitsNet revenues$ $1,000,000$$ $5,000,000$Variable costs$500,0002,000,000$Contribution margin$500,0003,000,000$Controllable fixed costs$02,000,000$Controllable margin$500,0001,000,000$Noncontrollable fixed costs$750,0001,500,000$Contribution by profit center$ $(250,000)$$ $(500,000)$

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

multiple choice

Winter Outerwear

High$-$End Suits

Closing either division would have the same impact on long$-$term profits.