assuming that the above results are likely to be typical of future quarterly perform 610112

The Euro Company is a wholesaler who sells its products to retailers throughout Europe. Euro’s headquarters is in Brussels. The company has adopted a regional structure with each region consisting of 3-5 sales territories. Each region has its own regional office and a warehouse which distributes the goods directly to the customers. Each sales territory also has an office where the marketing staff are located. The Scandinavian region consists of three sales territories with offices located in Stockholm, Oslo and Helsinki. The budgeted results for the next quarter are as follows:

Stockholm

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Oslo

Helsinki

Total

(£000’s)

(£000’s)

(£000’s)

(£000’s)

Cost of goods sold

800

850

1000

2650

Salespersons salaries

160

200

240

600

Sales office rent

60

90

120

270

Depreciation of sales office equipment

20

30

40

90

Apportionment of warehouse rent

24

24

24

72

Depreciation of warehouse equipment

20

16

22

58

Regional and headquarters costs

Cause-and-effect allocations

120

152

186

458

Arbitrary apportionments

360

400

340

1100

Total costs assigned to each location

1564

1762

1972

5298

Reported profit/(loss)

236

238

(272)

202

Sales

1800

2000

1700

5500

Assuming that the above results are likely to be typical of future quarterly performance should the Helsinki territory be discontinued?

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