ABC Retail is deciding whether or not to close a store that has negative operating income.

			ALBERTA Store		ONTARIO Store		Total
Revenues			1,000,000.00		625,000.00		1,625,000.00
Operating Costs
	Cost of Goods Sold		700,000.00		450,000.00		1,150,000.00
	Lease		85,000.00		90,000.00		175,000.00
	Hourly Labour Costs		40,000.00		42,000.00		82,000.00
	Equipment Amortization		35,000.00		40,000.00		75,000.00
	Allocated Corporate Overhead		45,000.00		40,000.00		85,000.00
		Total Operating Costs	905,000.00		662,000.00		1,567,000.00
Operating Income			95,000.00		-37,000.00		58,000.00
Notes:		- Lease may be cancelled at any time without additional expenses
		- Equipment in Ontario store has a salvage value of $0
		- Corporate Overhead will decrease by $35,000 if Ontario Store is closed
		Should Ontario store be closed? Why ?

Answer rating: 100% (QA)

COMPARATIVE ANALYSIS STATEMENT Keep StoreDrop Store Revenue6250000 Less Variable costs Cost of Goods ... View the full answer