A4. Continue or discontinue Example 2: Division Sales (1000£) Variable cost (1000£) Contribution (1000£) Fixed cost (1000£) Profit/loss (1000£) A 350 280 70 B 420 210 210 C 150 120 30 Total 920 610 310 262.5 47.5 General fixed overheads are allocated to each division on the basis of sales revenue; 60% of the total fixed costs incurred by the company are specific to each division, being split equally between them. Using relevant cost, determine, which divisions should remain open if Northampton wishes to maximise profits?

A4. Continue or discontinue Example 2: Division Sales (1000£) Variable cost (1000£) Contribution (1000£) Fixed cost (1000£) Profit/loss (1000£) A 350 280 70 B 420 210 210 C 150 120 30 Total 920 610 310 262.5 47.5 General fixed overheads are allocated to each division on the basis of sales revenue; 60% of the total fixed costs incurred by the company are specific to each division, being split equally between them. Using relevant cost, determine, which divisions should remain open if Northampton wishes to maximise profits?

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter14: Decentralized Operations

Section: Chapter Questions

Problem 14.16E

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