Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Department Linens Total Hardware Sales $4,200,000 $3,180,000 $1,020,000 1,263,000 858,000 405,000 Variable expenses Contribution margin 2,937,000 2,322,000 615,000 Fixed expenses 2,190,000 1,380,000 810,000 Net operating income (loss) 747,000 $ 942,000 $ (195,000) A study indicates that $371,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 13% decrease in the sales of the Hardware Department. Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? Financial (disadvantage) Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Department Linens Total Hardware Sales $4,200,000 $3,180,000 $1,020,000 1,263,000 858,000 405,000 Variable expenses Contribution margin 2,937,000 2,322,000 615,000 Fixed expenses 2,190,000 1,380,000 810,000 Net operating income (loss) 747,000 $ 942,000 $ (195,000) A study indicates that $371,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 13% decrease in the sales of the Hardware Department. Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? Financial (disadvantage)
Expert Answer:
Answer rating: 100% (QA)
What financial advantage disadrat of discontinuing lines Fixed 371000 Main... View the full answer
Related Book For
Managerial Accounting
ISBN: 978-1259307416
16th edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer
Posted Date:
Students also viewed these accounting questions
-
Creaston Limiteds most recent monthly contribution format income statement is given below: Management is disappointed with the companys performance and is wondering what can be done to improve...
-
The most recent monthly contribution format income statement for Reston Company is given below: Management is disappointed with the company's performance and is wondering what can be done to improve...
-
The following is Alsatia Corporation's contribution format income statement for last month: Sales $1,400,000 Variable expenses $900,000 Contribution margin $500,000 Fixed expenses $300,000 Net...
-
The Apache NetBeans IDE is mainly composed of NetBeans Open-Source IDE and NetBeans Platform. (True/False)
-
What are three special kinds of interviews you may encounter? What are tips to succeed in them?
-
A paired difference experiment yielded nd pairs of observations. In each case, what is the rejection region for testing H0: d > 2? a. nd(t = 12, - .05 b. nd = 24, = .10 c. nd = 4, = .025 d. nd =...
-
The left side of an account is used to record a. debits. b. credits. C. debits or credits, depending on the type of account, d. increases.
-
Suppose the current USD/euro exchange rate is 1.2000 dollar per euro. The six month forward exchange rate is 1.1950. The six month USD interest rate is 1% per annum continuously compounded? Estimate...
-
3. Solve for x: 2cosx + cosx - 1 = 0 for 0 x 2. Use exact values rather than decimal approximations. Hint: consider 2A + A-1 = 0 with A = cosx
-
Draw a decision tree for the problem of deciding whether to move forward at a road intersection, given that the light has just turned green.
-
Battery capacity is measured in Amp-hours. It describes how longa battery can maintain a current of so many Amps, whilstmaintaining a constant voltage. For example 4 amp-hour battery canoutput a...
-
Explain the role of passivation in corrosion engineering, including the formation of protective oxide layers and the impact of alloying elements on enhancing corrosion resistance .
-
A Sheraton Hotel bond has a par value of $1,000, and has a coupon rate of 7.25%. The coupon in paid quarterly. The investor's rate of return is 9%. The bond will mature in 12 years, and the investor...
-
Chiphinga Enterprises is contemplating to phase out its inhouse security department. Management is geared to outsource this function form the available security companies in Malawi. Analyse the...
-
An oil drop with a mass of 7.20*100kg is moving up at a constant speed of 2.50m/s between two horizontal parallel plates. If the electric field strength between these plates is 2.20*10 V/m, what is...
-
Fiber Company sells several products. Information of revenue and costs is as follows: Selling price per unit $28.50 Variable costs per unit: Direct material $5.25 Direct manufacturing labour $1.15...
-
Discuss the various sources of conflict in business, as well as conflict resolution approaches that can be adopted by managers and project leaders.
-
A regular deposit of $100 is made at the beginning of each year for 20 years. Simple interest is calculated at i% per year for the 20 years. At the end of the 20-year period, the total interest in...
-
Fitness Fanatics is a regional chain of health clubs. The managers of the clubs, who have authority to make investments as needed, are evaluated based largely on return on investment (ROI). The...
-
Erie Company manufactures a mobile fitness device called the Jogging Mate. The company uses standards to control its costs. The labor standards that have been set for one Jogging Mate are as follows:...
-
A piece of laborsaving equipment has just come onto the market that Mitsui Electronics, Ltd., could use to reduce costs in one of its plants in Japan. Relevant data relating to the equipment follow...
-
Design a voltage reference source as shown in Figure 9.42 to have an output voltage of \(12.0 \mathrm{~V}\). A Zener diode with a breakdown voltage of \(5.6 \mathrm{~V}\) is available. Assume the...
-
Design an op-amp summer to produce an output voltage of \(v_{O}=3 v_{I 1}+\) \(1.5 v_{I 2}+2 v_{I 3}-4 v_{I 4}-6 v_{I 5}\). The largest resistor value is to be \(250 \mathrm{k} \Omega\).
-
Consider the bridge circuit in Figure P9.87. The resistor \(R_{T}\) is a thermistor with values of \(20 \mathrm{k} \Omega\) at \(T=300 \mathrm{~K}\) and \(21 \mathrm{k} \Omega\) at \(T=350...
Study smarter with the SolutionInn App