Channing Company is a large internet retailer with fulfillment warehouses in numerous locations throughout the U.S....

 

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Channing Company is a large internet retailer with fulfillment warehouses in numerous locations throughout the U.S. One of Channing's warehouses has been showing losses over several quarters, and management is considering closing the warehouse. If the warehouse is closed, only the warehouse manager will be retained by Channing. The warehouse manager's annual salary is $65,000. The warehouse fixtures and equipment have no resale value. Following is the most recent income statement for the warehouse: $1,440,000 1,040,000 400,000 Sales Less: Variable expenses Contribution margin Less: Fixed expenses Wages Insurance on inventory Depreciation on fixtures Advertising Operating income 329,800 31,200 21,600 36,000 $(18,600) What would be the impact on Channing's overall operating income if the warehouse is eliminated? a. Increase by $18,600 per year b. Decrease by $68,000 per year c. Decrease by $86,600 per year d. Increase by $46,400 per year Channing Company is a large internet retailer with fulfillment warehouses in numerous locations throughout the U.S. One of Channing's warehouses has been showing losses over several quarters, and management is considering closing the warehouse. If the warehouse is closed, only the warehouse manager will be retained by Channing. The warehouse manager's annual salary is $65,000. The warehouse fixtures and equipment have no resale value. Following is the most recent income statement for the warehouse: $1,440,000 1,040,000 400,000 Sales Less: Variable expenses Contribution margin Less: Fixed expenses Wages Insurance on inventory Depreciation on fixtures Advertising Operating income 329,800 31,200 21,600 36,000 $(18,600) What would be the impact on Channing's overall operating income if the warehouse is eliminated? a. Increase by $18,600 per year b. Decrease by $68,000 per year c. Decrease by $86,600 per year d. Increase by $46,400 per year

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Cost Analysis Contribution margin lost 400200 A... View the full answer