2B Drop or Retain a Segment Fresh Juice has three locations in Kamloops: Downtown, North Shore...

Transcribed Image Text:

2B Drop or Retain a Segment Fresh Juice has three locations in Kamloops: Downtown, North Shore and Dufferin. Management is concerned about the performance of the downtown location, the rent is high and management is debating closing the store. A company-wide segmented income statement follows: Downtown North Shore Dufferin Total $350,000 * 225,000 $250,000 175,000 75,000 $900,000 610,000 Sales $300,000 Variable expenses 210,000 290,000 Contribution margin 90,000 125,000 Fixed expenses 75,000 $50,000 150,000 40,000 265,000 Operating income (loss) $(60,000) $35,000 $25,000 An analysis of expenses reveals that if $40,000 of the downtown location's fixed expenses are allocated costs that would continue even if the store was closed. The North Shore and Dufferin locations could expect a 5% decrease in revenues due to lost promotional synergies closing the prominent downtown location. Required Compute the net dollar advantage or disadvantage of dropping the downtown location. 2B Drop or Retain a Segment Fresh Juice has three locations in Kamloops: Downtown, North Shore and Dufferin. Management is concerned about the performance of the downtown location, the rent is high and management is debating closing the store. A company-wide segmented income statement follows: Downtown North Shore Dufferin Total $350,000 * 225,000 $250,000 175,000 75,000 $900,000 610,000 Sales $300,000 Variable expenses 210,000 290,000 Contribution margin 90,000 125,000 Fixed expenses 75,000 $50,000 150,000 40,000 265,000 Operating income (loss) $(60,000) $35,000 $25,000 An analysis of expenses reveals that if $40,000 of the downtown location's fixed expenses are allocated costs that would continue even if the store was closed. The North Shore and Dufferin locations could expect a 5% decrease in revenues due to lost promotional synergies closing the prominent downtown location. Required Compute the net dollar advantage or disadvantage of dropping the downtown location.

Answer rating: 100% (QA)

rop of Telain he UOwntoWIT localIon North shore Dufferin Total 332500 S 237500 S ... View the full answer