Suppose a department store has two major departments: furniture and clothing. Due to changing consumer tastes...
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Suppose a department store has two major departments: furniture and clothing. Due to changing consumer tastes that have resulted in falling furniture sales, the department store is deciding whether or not to close its furniture department and devote more space to clothing, which is increasing in popularity. The department store's revenues every three months are $787143 while it retains its furniture department, and the department store estimates revenues will increase to $868578 every three months if they close the furniture department. Operating expenses will remain constant at $261006 every three months in either case. One-off costs associated with the closure of the furniture department would be $64347 spread evenly over one year. What is the department store's economic profit (every three months) for the year after closing the furniture department? Answer to the nearest whole number and include a negative sign if it is an economic loss (with no decimal places, $ sign, spaces or commas). Suppose a department store has two major departments: furniture and clothing. Due to changing consumer tastes that have resulted in falling furniture sales, the department store is deciding whether or not to close its furniture department and devote more space to clothing, which is increasing in popularity. The department store's revenues every three months are $787143 while it retains its furniture department, and the department store estimates revenues will increase to $868578 every three months if they close the furniture department. Operating expenses will remain constant at $261006 every three months in either case. One-off costs associated with the closure of the furniture department would be $64347 spread evenly over one year. What is the department store's economic profit (every three months) for the year after closing the furniture department? Answer to the nearest whole number and include a negative sign if it is an economic loss (with no decimal places, $ sign, spaces or commas).
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To calculate the department stores economic profit for the year after closing the furniture department we need to assess the changes in revenue and co... View the full answer
Related Book For
Introduction to Management Accounting
ISBN: 978-0133058789
16th edition
Authors: Charles Horngren, Gary Sundem, Jeff Schatzberg, Dave Burgsta
Posted Date:
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