HASF & company  sells paint and paint supplies carpet and wallpaper at a single store location in suburban Baltiomore Although the company has been very profitable over the year management has seen very profitable over the year management has seen a significant decline in wallpaper sales and earnings Much of this decline is attributable to the internet and to companies that advertise deeply discounted prices in magazines and offer customer free shipping and toll free telephone number recent figures follow 

	Paint and supplies	Carpeting	wallpaper	Total
sales	250,000	230,000	70,000	550,000
less variable cost	170,000	161,000	56,000	387,000
fixed costs	40,000	40,000	40,000	120,000
total cost	210,000	201,000	96,000	507,000
operating income	40,000	29,000	-26,000	43,000

Other information:

Management is studying whether to drop wallpaper because of the changing market and accompanying loss if the line is dropped the following changes are expected to occur 

1. The vacated space will be remodeled at a cost of 6,200 and will be devoted to an expanded line of high and carpet sales of carpet are expected to increase by 60,000 and the line overall contribution margin ratio will rise by 5% 

2.      Contemporaty can cut wallpapers fixed costs by 40% 

3.      Sales of paint and paint supplies are expected to fall by 20% 

4.      The firm will increase advertising expenditures by 12,500 to promote the expanded carpet line 

Required:

At what amount of proift  will be decreased after the dropped =?

Answer rating: 100% (QA)

Paint and supplies carpeting wallpaper Total Sales cost 250000 230000 70000 550... View the full answer