Problem:
The financial results of ABC Home Health Agency for the current year are summarized below for each of its four divisions. Unavoidable headquarters’ costs of $1,240,000 included in the total costs have been distributed to the divisions on the basis of revenue. The remaining portion of the total $6,126,000 of costs have been incurred at the divisional level and can be avoided if a division is closed.
ABC Home Health Agency Operating Results for the Year Ended December 9, 1997 (000s omitted)
|
|
|
Divisions
|
|
|
Total
|
North
|
South
|
East
|
West
|
|
Revenue
|
6,590
|
990
|
2,640
|
980
|
1,980
|
|
Total Costs
|
6,126
|
572
|
2,090
|
1,176
|
2,288
|
|
Profit (Loss)
|
464
|
418
|
550
|
(196)
|
(308)
|
Which division(s) of the ABC Home Health Agency, if any, should be shut down due to failure to cover divisional costs? Please show your work.