The June 2023 operating income information for Vinyls Plus is presented in the following table. (Ignore...

Transcribed Image Text:

The June 2023 operating income information for Vinyls Plus is presented in the following table. (Ignore income taxes) Total Sales Less: Variable expenses Contribution margin Less Fixed expenses Operating income . . Madrid €90,000 38,000 €52.000 27,000 . € 25,000 Seville € 130,000 98,000 €32,000 39,000 € (7,000) Total € 220,000 136,000 Additional Information: . If the Seville location is closed, it is estimated that the Madrid location will experience a 15% decrease in sales. Closing the Madrid location will not impact sales in Seville One-third of the fixed expenses that are allocated to each location will continue if either location is closed. The results presented for June are similar to those of all other months throughout the year. Required (show your work): € 84,000 66,000 € 18,000 • What would be the result on the monthly operating income in 2022 if the Seville location is closed. Vinyls Plus is thinking about implementing an incentive campaign in Seville that will not have an impact in Madrid. The annual expense for this campaign in Seville would be an additional €75,000 and it is expected to increase sales in Seville by 15 percent. What would be the impact of this campaign on the monthly operating income? To attract new business and create a customer base, fifty percent of the Seville location's sales are from products sold only at their variable cost. Vinyls Plus is contemplating deleting these items. This would decrease the direct fixed expenses in Seville by 18% and reduce the remaining sales in the Seville location by 20 percent. This would not impact the Madrid location. What would be the impact on the monthly operating income at Vinyls Plus if they eliminate the products that are sold at variable cost from their inventory? The June 2023 operating income information for Vinyls Plus is presented in the following table. (Ignore income taxes) Total Sales Less: Variable expenses Contribution margin Less Fixed expenses Operating income . . Madrid €90,000 38,000 €52.000 27,000 . € 25,000 Seville € 130,000 98,000 €32,000 39,000 € (7,000) Total € 220,000 136,000 Additional Information: . If the Seville location is closed, it is estimated that the Madrid location will experience a 15% decrease in sales. Closing the Madrid location will not impact sales in Seville One-third of the fixed expenses that are allocated to each location will continue if either location is closed. The results presented for June are similar to those of all other months throughout the year. Required (show your work): € 84,000 66,000 € 18,000 • What would be the result on the monthly operating income in 2022 if the Seville location is closed. Vinyls Plus is thinking about implementing an incentive campaign in Seville that will not have an impact in Madrid. The annual expense for this campaign in Seville would be an additional €75,000 and it is expected to increase sales in Seville by 15 percent. What would be the impact of this campaign on the monthly operating income? To attract new business and create a customer base, fifty percent of the Seville location's sales are from products sold only at their variable cost. Vinyls Plus is contemplating deleting these items. This would decrease the direct fixed expenses in Seville by 18% and reduce the remaining sales in the Seville location by 20 percent. This would not impact the Madrid location. What would be the impact on the monthly operating income at Vinyls Plus if they eliminate the products that are sold at variable cost from their inventory?

Answer rating: 100% (QA)

1 Impact of Closing Seville Location If the Seville location is closed there would be an impact on both the Madrid locations sales and expenses The fi... View the full answer