Shortflower Ltd currently publishes, prints and distributes a range of catalogues and instruction manuals. The management has now decided to discontinue printing and distribution and concentrate solely on publishing. Longplant Ltd will print and distribute the range of catalogues and instruction manuals on behalf of Shortflower Ltd commencing either at June 30 or November 30. Longplant Ltd will receive $65,000 per month for a contract which will commence either at June 30 or November 30.
The results of Shortflower Ltd for a typical month are as follows:
Salaries and wages
Materials and supplies
Other information has been gathered relating to the possible closure proposals:
Using the principles of incremental revenue and relevant costs, prepare a summary to show whether Shortflower Ltd should close the printing and distribution departments on financial grounds on June 30 or November 30. Show all workings.