Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Department Total Hardware Linens $ 4,190,000 $3,180,000 $1,010,000 1,394,000 983,000 2,796,000 2,197,000 2,140,000 1,320,000 411,000 599,000 820,000 $ 656,000 $ 877,000 $ (221,000) A study indicates that $374,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 19% decrease in the sales of the Hardware Department. Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Department Total Hardware Linens $ 4,190,000 $3,180,000 $1,010,000 1,394,000 983,000 2,796,000 2,197,000 2,140,000 1,320,000 411,000 599,000 820,000 $ 656,000 $ 877,000 $ (221,000) A study indicates that $374,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 19% decrease in the sales of the Hardware Department. Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department?
Expert Answer:
Answer rating: 100% (QA)
Solution Contribution Lost from the Linens Departme... View the full answer
Related Book For
Managerial Accounting
ISBN: 978-1259307416
16th edition
Authors: Ray Garrison, Eric Noreen, Peter Brewer
Posted Date:
Students also viewed these accounting questions
-
Creaston Limiteds most recent monthly contribution format income statement is given below: Management is disappointed with the companys performance and is wondering what can be done to improve...
-
The most recent monthly contribution format income statement for Reston Company is given below: Management is disappointed with the company's performance and is wondering what can be done to improve...
-
The following is Alsatia Corporation's contribution format income statement for last month: Sales $1,400,000 Variable expenses $900,000 Contribution margin $500,000 Fixed expenses $300,000 Net...
-
Use Gordon formula to calculate the price of the stock. ITC company expected to pay dividend of $4 and growth rate of 3% per year is constant forever. Required return is 8%.
-
Some of the largest import tariffs (taxes on only imported goods) are on shoes. Strangely, the tariff is higher on cheaper shoes. The highest U. S. tariff, 67%, is on a pair of $ 3 canvas sneakers,...
-
Consider the data below. These data were collected in an experiment where \(x_{1}=\) reaction time in minutes and \(x_{2}=\) temperature in degrees Celsius. The response variable \(y\) is...
-
0.0284 Use the Standard Normal Table or technology to find the z-score that corresponds to the cumulative area or percentile. Table 4-Standard Normal Distribution Arca Z 0 Z .09 .08 .07 .06 .05 .04...
-
The Alta Company is constructing a production complex which qualifies for interest capitalization. The following information is available: Capitalization period: January 1, 2007 to June 30, 2009...
-
Consider a bond with maturity 2 year, 100 face value, coupon 5.95%, and yield 7.80%. Compute a dollar duration numerically using a dy =0.001%. Report you result with two digits decimal accuracy and...
-
Determine the breakeven volume of injections for 2016 using the following formula for the contribution margin ratio approach: Breakeven revenue = Total fixed costs + [(Total variable costs / Total...
-
Gretta earns a 8% commission as a salesperson. she sells a piglet for $152. what is the amount of grettas commission? round to the nearest hundredth
-
The scores on a university entrance exam are normally distributed with a mean of 72% and a standard deviation of 15. a. Find the probability that a student taking the entrance exam will score below...
-
A tourism magazine surveyed 5,000 people for their expected travel plans in the following year. The response rate of the survey is seventy-five per cent. Forty-five per cent of the respondents of the...
-
Trevs Gardening Services purchased a trailer on 1 July 2019 for $26 200. It was estimated to have a useful life of 5 years and a residual value at the end of that time of $2800. Required (a) What is...
-
At the end of the first year of operations, Arch Etec, owner of Architect Designs, engaged you to prepare yearly financial statements for the year ended 30 June 2019, on both the cash basis and the...
-
Karen Broderick commenced business on 1 July 2018. On 30 June 2019, she found that she had written off debts amounting to $1875. In addition, she found it necessary to create an allowance for...
-
What is the value of the variable 'total' from the following JavaScript code? var x = 1: var y = '2': var z = 0; var total = x+y+z;
-
With your classmates, form small teams of skunkworks. Your task is to identify an innovation that you think would benefit your school, college, or university, and to outline an action plan for...
-
Crossfire Company segments its business into two regionsEast and West. The company prepared the contribution format segmented income statement shown below: Required: 1. Compute the companywide...
-
Selected operating information on three different companies for a recent year is given below: Required: For each company, state whether the company would have a favorable or unfavorable volume...
-
Pecunious Products, Inc.'s financial results for the past three years are summarized below: Your boss has asked you to review these results and then answer the following questions: a. Is it becoming...
-
Describe the process of going public using an IPO, starting with underwriter selection and proceeding through the various stages that lead to determination of an issue price.
-
Identify at least four methods by which investors and/or the entrepreneur in a new venture can harvest their investment in a new venture. Describe the costs and benefits of each, and provide a...
-
From the perspective of the entrepreneur, what are the pros and cons of an IPO as opposed to private sale of the venture to a public company in exchange for stock or cash?
Study smarter with the SolutionInn App