Your Retail Store's accountant prepared the following income statement for the ladies' accessories product line: Sales...
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Your Retail Store's accountant prepared the following income statement for the ladies' accessories product line: Sales Less: Variable expenses Contribution margin Less: Fixed expenses: Wages Insurance on inventory Advertising Net operating income (loss) $1,125,000 62,500 687,500 Sales Less: Variable expenses Contribution margin Fixed expenses $3,125,000 1,468,750 1,656,250 Management is concerned about the loss and is considering dropping the product line. If the product line is dropped, a job has to be created elsewhere for a long-term employee currently earning an annual salary of $93,750. Less: Wages expenses Less: Insurance on inventory expenses Less: Advertising expenses Net operating income (loss) 1,875,000 Required: Calculate the increase or decrease in the operating income in both alternatives. $ (218,750) Keep Accesories Product Line Drop Accesories Product Line Should the ladies' accessories product line be dropped? ● Yes No. Your Retail Store's accountant prepared the following income statement for the ladies' accessories product line: Sales Less: Variable expenses Contribution margin Less: Fixed expenses: Wages Insurance on inventory Advertising Net operating income (loss) $1,125,000 62,500 687,500 Sales Less: Variable expenses Contribution margin Fixed expenses $3,125,000 1,468,750 1,656,250 Management is concerned about the loss and is considering dropping the product line. If the product line is dropped, a job has to be created elsewhere for a long-term employee currently earning an annual salary of $93,750. Less: Wages expenses Less: Insurance on inventory expenses Less: Advertising expenses Net operating income (loss) 1,875,000 Required: Calculate the increase or decrease in the operating income in both alternatives. $ (218,750) Keep Accesories Product Line Drop Accesories Product Line Should the ladies' accessories product line be dropped? ● Yes No.
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1 STATEMENT TO DETERMINE INCREASE DECREASE IN NET OPERATING INCOME ALL AMOUNT ... View the full answer
Related Book For
Introduction to Managerial Accounting
ISBN: 978-1259105708
5th Canadian edition
Authors: Peter C. Brewer, Ray H. Garrison, Eric Noreen, Suresh Kalagnanam, Ganesh Vaidyanathan
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