Baluja Shoes Ltd which has a chain of shoe shops throughout the country has two shops in Madras of which Shop I makes a profit and Shop II makes a loss. The following is the summarised profit and loss...

Baluja Shoes Ltd which has a chain of shoe shops throughout the country has two shops in Madras of which Shop I makes a profit and Shop II makes a loss. The following is the summarised profit and loss account of shop II for the current month ended March 31:

The commission to salesmen is a fixed percentage on turnover. There is a common manager for the two shops and his salary is equally shared by the two shops. The motor van is also common to the two shops. Its fixed expenses are shared equally by the two shops but the running expenses are apportioned on the basis of the turnover.

Prepare a report explaining the financial implication of the closing down Shop II, assuming that 20 per cent of its turnover will be gained by Shop I without that shop needing any additional staff.