Department M Has a Gross Profit of $50 000, Direct

Multiple Choice

Department M has a gross profit of $50 000, direct departmental expenses of $28 000 and allocated expenses of $26 000, giving it a net loss of $4 000. What would be the effect on the total organisation's profit if Department M were closed?

A) Profits would decrease $2 000
B) Profits would increase by $4 000
C) Profits would decrease by $22 000
D) Profits would increase by $26 000