WILLIAM L. WENCESLAO JR.

Contact Number 0948-693-1360

BA202 Managerial Accounting

Discuss the techniques you’ve learned from your chapter readings that are useful for
managers in deciding to shut down a branch/division/segment. Describe how the
techniques are used.

A large company where there are many products to be sold in the market requires the
manager to monitor and evaluate the performance of its division or segments. Managers of the
said business units are responsible to maintain the routine business practice of the company and
ensure that it is being met accordingly; divisional managers are also responsible to build a strategy
for their segment as their main objective function.

When deciding whether or not to shut down a particular business segment, is one of the
most crucial parts of the manager. Based on what I have read in these chapters the managers
should keep in mind that the overall profitability of the company relies upon among segments
performance, managers should be able how to determine and allocate traceable cost and fixed
cost.
It doesn’t mean that if one segment is not generating enough (profit) more than the other
segment then that should be eliminated. When the segment’s margin is negative I think this is the
right time to shut down a segment because we are wasting resources thus it will incur additional
cost to the company.

Managers should view the company in a wider picture because relying only on figures may
not good for the company’s health in the long run. Managers should understand the business
perspective when sizing-up business overall profitability.