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McGrew_MBA733 Week 6 Problems (Autosaved)

McGrew_MBA733 Week 6 Problems (Autosaved) - (000's Sales...

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(000's) Total Northgate Edgewood Weston Southboro Sales \$3,800.00 \$1,520.00 \$570.00 \$1,140.00 \$570.00 Costs \$3,650.00 \$1,225.00 \$380.00 \$1,685.00 \$360.00 remove allocated \$(975.00) \$(390.00) \$(146.25) \$(292.50) \$(146.25) segment margin \$1,125.00 \$685.00 \$336.25 \$(252.50) \$356.25 Management Control Process In a belt-tightening measure, the Sandalwood company is taking a close look at its four divisions with an eye toward closing any unprofitable ones. Costs incurred at the corporate headquarters level have been distributed to each division in proportion to sales revenue. All costs incurred by each division except the allocated corporate headquarters costs are considered to be avoidable if a division is shut down. The corporate headquarters costs amount to \$975,000. Divisions (\$000s) Total Northgate Edgewood Weston Southboro Sales \$3800 \$1520 \$570 \$1140 \$570 Costs \$3650 \$1225 \$380 \$1685 \$360 Profits (losses) \$150 \$295 \$190 \$ (545) \$210 Required : a. Based on the above information, what recommendation would you make concerning possible division closings? Show all calculations. b. Since the above data represents semiannual information, what other variables should be included in the decision to close down a division?

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a. I would recommend that you close
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