Answer Happy

1.Based on the above information, do you advice the
company to close department (B) assuming that in case of closing
the department all department-specific costs would be
eliminated.
2.If the company closed department (B) and expand its
operations in department C, which entails increasing the revenues
and costs by 40%, and 80% of the fixed OH department specific costs
moved to department C. would you advice the company to do
so?
ABC Inc. producing A, B and C products, the following are costs and revenues information regarding these products during 2020: Data A B C Total Revenues 200,000 300,000 150,000 650,000 Costs: DM DL V.OH F.OH (department-specific) F.OH (factory – general) Operating expense (Fixed) Operating income 80,000 30,000 15,000 20,000 10,000 20,000 25,000 160,000 60,000 25,000 35,000 10,000 20,000 (10,000) 60,000 20,000 10,000 15,000 10,000 20,000 15,000 300,000 110,000 50,000 70,000 30,000 60,000 30,000