a) Lydia Store has three departments all housed in the same building. Management is considering closing down
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Question:
a) Lydia Store has three departments all housed in the same building. Management is considering closing down the Jewelry Department which has consistently shows a net loss. The projected income statement is shown below:
The RM12,800 fixed costs are salaries of the departmental supervisors and these costs can be avoided in the event that the departments are closed.
Required:
You are required:
- To decide whether the Jewelry Department should be closed
- To compute the minimum rental acceptable if the Jewelry Department is closed and the floor space is to be let out.
- To decide whether the company should substitute the Jewelry Department with Electrical instead, using the same space. The forecasted revenues and costs are: sales RM25, 000: variable cost of sales and expenses RM10, 000; direct fixed cost RM 4,000.
Related Book For
Accounting Business Reporting for Decision Making
ISBN: 9780730302414
4th edition
Authors: Jacqueline Birt, Keryn Chalmers, Albie Brooks, Suzanne Byrne, Judy Oliver
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