USA Help with an accounting question (closing down a division)

[mothman]

Can someone help explain the answer to this seemingly basic question regarding the increase in company profits if a division were closed?

I have attached the question. The answer is B, but no matter how I spin the numbers, I cannot figure out how they get that answer. Thanks so much for any help you can provide.

 

[Triest123]

This is the question about relevant cost concept.

You have to identify which costs can be avoided (i.e.relevant costs) and which costs cannot be avoided (i.e. irrelevant costs) if the division is closed down.

In the question, all the costs except building rents & allocated home costs are relevant costs, so the loss for the division will be reduced by (4,400,000 - 2,500,000 -700,000)=1,200,000 if it is close down, which in turn increase the company's profit