Manuel Inc. produces textiles in many different forms. After recording lower tha

Question

Manuel Inc. 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: Evaluate the short-term and long-term effects on profits of closing each division. (Loss amounts should be indicated with a minus sign.) Winter Outerwear High-End Suits Net revenues Variable costs $ 1,850,000 1,180,000 $ 5,850,000 2,680,000 3,170,000 2,085,000 Contribution margin 670,000 Controllable fixed costs Controllable margin Noncontrollable fixed costs 670,000 835,000 1,085,000 1,670,000 Contribution by SBU $ (165,000) $ (585,000) Winter Outerwear High-End Suits Short-term effects Long-term effects

Explanation / Answer

  ?Winter out wears High-end Suits   

   Shorrt term effects $ 0 $2 085 000 Long term effects $165 000 $1 085 000

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