Question: Mitchell Craft Co has three department Pictures & Frames, Craft Supplies and Home Decor. The most recent statement showing departmental results is shown below Pictures
Mitchell Craft Co has three department Pictures & Frames, Craft Supplies and Home Decor. The most recent statement showing departmental results is shown below Pictures & Craft Home Company Total Erames Sunglies Decor Sales $1.000.000 $475,000 $600,000 $2,075.000 Cost of Goods Sold (500,000) Gross Profit Direct Expenses 500.000 (200,000) (280,000) (1.180,000) (400,000) $195.000 200.000 895.000 (150.000) (100.000) (450,000) Allocated Expenses (100.000 (175.000) 125.000): 350.000) Operating Income (Loss) $200,000 ($130,000) $25,000 95,000 Based on these income statements, management is planning on eliminating the Craft Supplies department, as it is generating net loss Instructions. Answer the following requirements showing as much of your work as is practical where applicable. What type of departments (centers or divisions) are Pictures & Frames, Craft Supplies and Home Decor? b-Calculate the Craft Supplies department's contribution to overhead. c-Calculate total operating income for Mitchell assuming the Craft Supplies department is eliminated and no other changes to operations occur d-Should the Craft Supplies department be eliminated? Why or why not
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
