Shown as follows is a segmented income statement for Drexel-Hall during the current month: Profit Centers...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Shown as follows is a segmented income statement for Drexel-Hall during the current month: Profit Centers Store 2 Drexel-Hall Dollars % Store 1 Dollars $ 1,800,000 100% $ 600,000 % 100% Dollars % Store 3 Dollars % $ 600,000 100% $ 600,000 100% 1,080,000 $ 720,000 432,000 60 372,000 62 40% $ 228,000 38% 24 120,000 $ 288,000 180,000 16% 10 $ 108,000 48,000 20 18% 378,000 $ 222,000 102,000 63 330,000 55 37% 17 8 $ 120,000 66,000 20% 11 $ 270,000 210,000 $ 60,000 66,000 45% 35 10% 11 $ 72,000 6% 2 4% $ 60,000 10% $ 54,000 9% $ (6,000) (1)% Sales Variable costs Contribution margin Traceable fixed costs: controllable Performance margin Traceable fixed costs: committed Store responsibility margin Common fixed costs $ 108,000 36,000 Income from operations es All stores are similar in size, carry similar products, and operate in similar neighborhoods. Store 1 was established first and was built at a lower cost than were Stores 2 and 3. This lower cost results in less depreciation expense for Store 1. Store 2 follows a policy of minimizing both costs and sales prices. Store 3 follows a policy of providing extensive customer service and charges slightly higher prices than the other two stores. Top management of Drexel-Hall is considering closing Store 3. The three stores are close enough together that management estimates closing Store 3 would cause sales at Store 1 to increase by $79,000, and sales at Store 2 to increase by $139,000. Closing Store 3 is not expected to cause any change in common fixed costs. Required: Compute the increase or decrease that closing Store 3 should cause in: a. Total monthly sales for Drexel-Hall stores. b. The monthly responsibility margin of Stores 1 and 2. c. The company's monthly income from operations. Complete this question by entering your answers in the tabs below. Required A Required B Required C Shown as follows is a segmented income statement for Drexel-Hall during the current month: Profit Centers Store 2 Drexel-Hall Dollars % Store 1 Dollars $ 1,800,000 100% $ 600,000 % 100% Dollars % Store 3 Dollars % $ 600,000 100% $ 600,000 100% 1,080,000 $ 720,000 432,000 60 372,000 62 40% $ 228,000 38% 24 120,000 $ 288,000 180,000 16% 10 $ 108,000 48,000 20 18% 378,000 $ 222,000 102,000 63 330,000 55 37% 17 8 $ 120,000 66,000 20% 11 $ 270,000 210,000 $ 60,000 66,000 45% 35 10% 11 $ 72,000 6% 2 4% $ 60,000 10% $ 54,000 9% $ (6,000) (1)% Sales Variable costs Contribution margin Traceable fixed costs: controllable Performance margin Traceable fixed costs: committed Store responsibility margin Common fixed costs $ 108,000 36,000 Income from operations es All stores are similar in size, carry similar products, and operate in similar neighborhoods. Store 1 was established first and was built at a lower cost than were Stores 2 and 3. This lower cost results in less depreciation expense for Store 1. Store 2 follows a policy of minimizing both costs and sales prices. Store 3 follows a policy of providing extensive customer service and charges slightly higher prices than the other two stores. Top management of Drexel-Hall is considering closing Store 3. The three stores are close enough together that management estimates closing Store 3 would cause sales at Store 1 to increase by $79,000, and sales at Store 2 to increase by $139,000. Closing Store 3 is not expected to cause any change in common fixed costs. Required: Compute the increase or decrease that closing Store 3 should cause in: a. Total monthly sales for Drexel-Hall stores. b. The monthly responsibility margin of Stores 1 and 2. c. The company's monthly income from operations. Complete this question by entering your answers in the tabs below. Required A Required B Required C
Expert Answer:
Related Book For
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-1259692406
18th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello
Posted Date:
Students also viewed these accounting questions
-
Hepras, Inc., has two product lines: routers and ethernet switches. During the current month, the two product lines reported the following results. ________________________________________________...
-
This assignment requires you to complete the 2022 tax reporting for a fictional woman named Anna Smith. Question 1 T1 - step 4 - line 66 This is Anna's taxable income Answer: Question 2 T1 - step...
-
93) Clay of the Land is a manufacturer of glazed clay pots. Currently, it produces 300 clay pots per month which it sells through nurseries at a constant price of $5 per pot. Current demand for clay...
-
Briefly explain the accounting treatment for sales returns and allowances. Where are these accounts reported in the income statement?
-
The enthalpy of a pure ideal gas depends on temperature only. Hence, H ig is often said to be independent of pressure, and one writes (H ig / P) T = 0 . Determine expressions for (H ig / P) V and (H...
-
Consider the calculation of an external rate of return (ERR). The positive cash flows in the cash flow profile are moved forward to \(t=n\) using what value of \(i\) in the \((F \mid P i, n-t)\)...
-
Matthews Delivery Service, Inc., completed the following transactions during its first month of operations for January 2012: a. Matthews Delivery Service, Inc., began operations by receiving $6,000...
-
The unemployment rate among workers under 25 in a populous state went from 8.9% to 6.7% in one year. Assume an average of 1 comma 340 comma 500 workers and estimate the decrease in the number...
-
What is the value of x after executing the following statements: int x = 2; int y = 3; switch (y) { case 1: x += 5; case 2: X -= 2; case 3: x *= 4; case 4: 1 x / = 2; default: X--;
-
HOW WOULD YOU DEAL WITH A ''STAR'' SALEPEOPLE WHO IS AGAINST MOVING AWAY FROM COMMISSION ONLY COMPENSATION PLAN? WHAT OPTIONS MIGHT YOU CONSIDER IF HE OR SHE THREATENED TO LEAVE THE DEALERSHIP TO...
-
Introduce the meaning of organizational development; what it is and what it is not.
-
Distinguish among the roles in a Scrum project. (15 marks) B. Explain the events in a Scrum project.
-
What are examples of administrative decisions that might be made in managing the performance of professors OR HR professions? Developmental decisions?
-
An example of an exposure to the ergonomics hazard of whole body vibration mighy be ?
-
Assess the impact on the U.S. stock market when the Federal Reserve increases the money supply, and whether or not you believe the impact is predictable.
-
Gopher, Inc. developing its upcoming budgeted Costs of Quality (COQ) with the following information: Expense Item Budget Raw Materials Inspection $ 15,000 EPA Fine 200,000 Design Engineering 15,000...
-
Identify the two factors that determine the difference between the present value and the future amount of an investment.
-
Fox Company purchased items of inventory as follows: May 3 100 units @ $3.05 May 10 150 units @ $3.10 May 15 120 units @ $3.15 By the end of the month of May, Fox had sold 125 units. If the company...
-
Into which of the three elements of manufacturing cost would each of the following be classified? a. Tubing used in manufacturing bicycles. b. Wages paid by an automobile manufacturer to employees...
-
Consider the homogeneous bar, of negligible cross section, mass \(M=1.333 \mathrm{~kg}\) and length \(L=60.0 \mathrm{~cm}\) in Fig.12.19 . It is constrained to rotate in a vertical plane about its...
-
A projectile of mass \(m=2.5 \mathrm{~kg}\) is shot tangentially (see Fig.12.19) at the edge of a ring having radius \(R=50 \mathrm{~cm}\) and whose mass is equal (within measurement errors) to that...
-
A homogeneous disk, having mass \(M=2.50 \mathrm{~kg}\) and radius \(R=15.0 \mathrm{~cm}\), can rotate, without friction, about a fixed horizontal axis, passing through the point \(\mathrm{O}\) of...
Study smarter with the SolutionInn App