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You are the managing director of a company in business to provide a selection of different training courses. You have a permanent staff of ten including six trainers and a number of other associates to whom you provide work when it is available and appropriate. After a great deal of negotiating, you have reached agreement with the CIPD to provide a number of their short courses over the next three years. You decide that you will switch four of your existing staff from their current courses onto the CIPD courses because of their high status and likely profitability. Although you can find some associates to take over those courses relinquished, it is a tight market and you decide that you will need to drop the five least profitable courses, rather than recruit unsuitable staff to run them and thereby put the reputation of the company at risk.
You decide that you will use the principle of marginal costing to decide on which courses will be dropped, given that the overhead resources, such as heating, and room hire are likely to be the same for all courses. How will you do this?
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