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 Hardware Linens Total $4,120,000 $3,080,000 $1,040,000 Sales Variable expenses 1,389,000 974,000 415,000 Contribution margin 2,731,000 2,106,000 625,000 2,270,000 1,380,000 Fixed expenses 890,000 Net operating income (loss) $ 461,000 $ 726,000 $(265,000) A study indicates that $375,000 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? Answer is complete but not entirely correct. Financial (disadvantage) $ (898,780) Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Department Hardware Linens Total $4,120,000 $3,080,000 $1,040,000 Sales Variable expenses 1,389,000 974,000 415,000 Contribution margin 2,731,000 2,106,000 625,000 2,270,000 1,380,000 Fixed expenses 890,000 Net operating income (loss) $ 461,000 $ 726,000 $(265,000) A study indicates that $375,000 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? Answer is complete but not entirely correct. Financial (disadvantage) $ (898,780)
Expert 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...
-
Economists are difficult to understand. They claim that they can put a monetary value on premature death, but not on human life. They also claim that they can value ecosystem services (such as a...
-
Refer to the situation described inBE 11-2. Assume the machine was purchased on March 31, 2011, instead of January 1. Calculate depreciation expense for 2011 and 2012 using each of the following...
-
Under what circumstances should a firm report a contingent liability?
-
Which of the symbolic representations in Figure 2-24 indicates that a sales invoice has been filed? Figure 2.24 [a] [b] [c] [p]
-
Audio Products, Inc., produces two AM/ FM/ CD players for cars. The radio/ CD units are identical, but the mounting hardware and finish trim differ. The standard model fits inter-mediate and full-...
-
Job cost sheets are used to record costs for: a. Services performed b. Raw materials c. Mass-produced items d. Customized products
-
The rod OA is held at the constant angle = 30 while it rotates about the vertical with a constant angular rate = 120 rev/min. Simultaneously, the sliding ball P oscillates along the rod with its...
-
Sports Corporation Inc. purchased sports equipment for a 5-year project at a value of $500,000 and is depreciated based on a straight-line depreciation to zero. Due to internal issues, management...
-
= za z 1. Suppose that a firm has a Cobb-Douglas production function, that is, f(21, 22) where a, b > 0. (a) Show that this production technology satisfies the no-free lunch property. (b) Show that...
-
Ballard Company uses the perpetual inventory system. The company purchased $16,000 of merchandise from Andes Company under the terms 2/10, net/30. Ballard paid for the merchandise within 10 days and...
-
A firm has a Cobb-Douglas production function q = f(K, L) = KaL-a where K = K = 10,000, w = 20, r = 0.01, a = 0.5 1. Compute total quantity in terms of labor (SR total product relation) 2. Determine...
-
Determine the Gravitational Potential Energy and Kinetic Energy at Position E. PE= Jand the KE J
-
On 1/2/21, American Express bought 10% of Associated Bank's common stock for $110 million. Associated Bank's net income for the year ended 12/31/21, was $140 million. The fair value of the shares...
-
Essence of Skunk Fragrances, Limited, sells 9,300 units of its perfume collection each year at a price per unit of $415. All sales are on credit with terms of 1/10, net 40. The discount is taken by...
-
All of the following assets can be depreciated, except: (a) A bulldozer (b) A copper mine (c) A surgical robot (d) A conveyor belt
-
The Excel worksheet form that appears below is to be used to recreate Example E and Exhibit 13-8. Download the workbook containing this form from Connect, where you will also receive instructions...
-
Refer to the data in Exercise 6-16. Assume that Minneapolis' sales by major market Data in Exercise 6-16 The company would like to initiate an intensive advertising campaign in one of the two market...
-
Security Pension Services helps clients to set up and administer pension plans that are in compliance with tax laws and regulatory requirements. The firm uses a job order costing system in which...
-
In what two ways can the breakeven point be stated?
-
The Thermo-Bond Manufacturing Company maintains its fixed-asset records on its computer. The fixed-asset master file includes the following data items: Required Refer to Table 9-7, which describes...
-
If total monthly fixed costs for a company were plotted on a graph for seven months, would the line drawn between the plotted points be parallel to the base or sloped? Explain why.
Study smarter with the SolutionInn App