Redmond Ltd Is Closing One of Its Divisions

question 21

Multiple Choice

Redmond Ltd is closing one of its divisions. Operating data on this division follows: Overhead consists of $30,000 in salary and $10,000 for rent and insurance. The salary is for the chief engineer, who will continue to work for Redmond even if the division is closed.
Assuming all overhead costs continue to be incurred even if the division closes, what will be the effect on overall company profits of closing the division?

• A) $10,000 decrease
• B) $40,000 decrease
• C) $40,000 increase
• D) $30,000 decrease

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Definitions:

White-collar Deviance

Non-violent crime committed by individuals in professional roles, involving deception for financial gain, such as fraud or embezzlement.

Personal Gain

Advantages or benefits, often of a financial or material nature, pursued or achieved for oneself.

Corporate Gain

The increase in value or wealth of a business entity, typically measured in financial terms and often pursued through various strategies and operations.

Profit Motive

The incentive or drive to achieve financial gain or profit through business activities or investment.