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ACCA PM例题：Shut down decision
文章来源：ACCA官网
发布时间：2021-08-18 17:28
阅读：1323次
Shut down decision
A company has two production lines and its management accounts show the following:
The total fixed costs of$24m have been apportioned to each production line on the basis of the floor space occupied by each line in the factory.
The company is concerned about the loss that is reported by Production Line B and is considering closing down that line.Closing down either production line would save 25%of the total fixed costs.
Should the company close down Production Line B?
Therefore,the closure of Production Line B is not a good idea as the revenue lost is greater than the value of the costs saved.
What about closing down Production Line A?
The incremental cash flows of this decision would be:
The closure of Production Line A would also result in the revenue lost being greater than the value of the costs saved,so this isn’t a good idea either.【点击免费下载>>>更多ACCA学习相关资料】
Really,the heart of the matter is the misleading effect of the relatively arbitrary apportionment of the fixed costs.A more useful presentation of the figures for decision-making would be:
Note that the$2m total profit is the same as the profit of$6m from Production Line A and the loss of$4m from Production Line B as shown in the table at the start of this example.
If either production line were closed down,fixed costs saved are 25%x$24m=$6m,however the contribution lost from the products(and contribution looks at cash flows caused by production)would be either$16m or$10m,which exceed the cash saved on the fixed costs.
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