Rambutan Computer Store sells computers and related products. In addition, it sells copy machines and supplies....

Transcribed Image Text:

Rambutan Computer Store sells computers and related products. In addition, it sells copy machines and supplies. The company has the following information available concerning each segment of the business. Sales Revenue Expenses: Variable RAMBUTAN COMPUTER STORE SEGMENT ANALYSIS OF OPERATIONS Computers Fixed--Salaries Fixed--Others Total Expenses Operating Profit (Loss) REQUIRED: (1) (2) $ $ 600,000 $ 280,000 60,000 175,000 515,000 85,000 $( Copiers 150,000 $ 75,000 20,000 65,000 160,000 10,000) $ Total 750,000 355,000 80,000 240,000 675,000 75,000 The store manager wants to discontinue the copier segment since it has consistently shown an operating loss. If the segment is discontinued, only the fixed salaries would be eliminated and the current store space occupied by the copier segment could not be used for any other business venture that would generate revenue. Currently, the other fixed expenses consist of costs that are allocated to each segment based upon store space occupied. Should the company discontinue the copier segment? Calculate the operating profit or loss for the company if the copier segment is discontinued. Rambutan Computer Store sells computers and related products. In addition, it sells copy machines and supplies. The company has the following information available concerning each segment of the business. Sales Revenue Expenses: Variable RAMBUTAN COMPUTER STORE SEGMENT ANALYSIS OF OPERATIONS Computers Fixed--Salaries Fixed--Others Total Expenses Operating Profit (Loss) REQUIRED: (1) (2) $ $ 600,000 $ 280,000 60,000 175,000 515,000 85,000 $( Copiers 150,000 $ 75,000 20,000 65,000 160,000 10,000) $ Total 750,000 355,000 80,000 240,000 675,000 75,000 The store manager wants to discontinue the copier segment since it has consistently shown an operating loss. If the segment is discontinued, only the fixed salaries would be eliminated and the current store space occupied by the copier segment could not be used for any other business venture that would generate revenue. Currently, the other fixed expenses consist of costs that are allocated to each segment based upon store space occupied. Should the company discontinue the copier segment? Calculate the operating profit or loss for the company if the copier segment is discontinued.

Answer rating: 100% (QA)

To determine whether the company should discontinue the copier segment we need to assess the impact of discontinuation on the overall operating profit ... View the full answer