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    Case study: The Liquid Chemical Company

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    Attached is a case study and I just need help in answering two questions:

    What are the advantages of one alternative over the other? Which action would you favor?

    ** See ATTACHED file(s) for complete details **

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    Solution Preview

    Segregate the relevant cost i.e. costs which will change if the closing the division is taken:
    The relevant costs if we close down the division are :
    1. Amount to be paid for contracting = $250,000
    2. Savings in other material cost: -$100,000
    3. Savings in GHL: $40000/1000*800=-$32,000
    4. ...

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