Accounting for IGCSE & O level - Final Statements (Section 1 - No. 7)

It is important to identify the contribution to profit or loss of each department in a business because it allows for:

Identifying and investigating poor performance.

Securing managers and employees fairly in each department for good performance.

Improving overall profitability by taking actions to improve the performance of poor-performing departments or by shutting down loss-making ones.

Ignoring individual department performances.

This is mentioned in the text under the section on departmental accounts.