The Ikea outlet in Venice has three operating departments. An income statement for the most recent...

 

Transcribed Image Text:

The Ikea outlet in Venice has three operating departments. An income statement for the most recent month of operations appears below. Sales Variable costs Furniture Food Fabrics Total $55,000 $44,000 $11,000 $110,000 $33,000 $17,600 $5,500 $56,100 $22,000 $26,400 $5,500 $53,900 $5,000 $4,000 $4,000 $13,000 Contribution margin Fixed costs, avoidable Fixed costs, allocated based on sales dollars $10,000 $8,000 $2,000 $20,000 Profit (Loss) $7,000 $14,400 ($500) $20,900 The space currently being used by the Fabrics department could be converted to a café. If this were done, sales of the cafe are expected to be $22,000 with variable costs of $8,800 and avoidable direct fixed costs of $3,000. Assuming no effects on the Furniture and Food departments, income for the month would be The Ikea outlet in Venice has three operating departments. An income statement for the most recent month of operations appears below. Sales Variable costs Furniture Food Fabrics Total $55,000 $44,000 $11,000 $110,000 $33,000 $17,600 $5,500 $56,100 $22,000 $26,400 $5,500 $53,900 $5,000 $4,000 $4,000 $13,000 Contribution margin Fixed costs, avoidable Fixed costs, allocated based on sales dollars $10,000 $8,000 $2,000 $20,000 Profit (Loss) $7,000 $14,400 ($500) $20,900 The space currently being used by the Fabrics department could be converted to a café. If this were done, sales of the cafe are expected to be $22,000 with variable costs of $8,800 and avoidable direct fixed costs of $3,000. Assuming no effects on the Furniture and Food departments, income for the month would be

Answer rating: 100% (QA)

Lets calculate the income for the month after converting the Fabrics department space into a caf Cur... View the full answer