You own a business with three stores, each of these stores is defined as a segment for
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Question:
You own a business with three stores, each of these stores is defined as a segment for your analysis of the company’s performance. Your 2022 results by store are listed below.
1. What is the Duluth’s store breakeven point in sales $ for 2022?
2. If the Lithia Springs store wants to make a profit (segment margin) of $50,000, how many $ in sales would they need to generate?
3. Your business partner says that the company has grown too fast, and he suggests shutting down a store. Assuming store performance is expected to stay the same for the foreseeable future, which store would you choose to shut down? Why?
| Total Company | Duluth | Roswell | Lithia Springs | |
| Sales | $300,000 | $50,000 | $50,000 | $200,000 |
| Variable Expenses | $135,000 | $35,000 | $35,000 | $65,000 |
| Contribution Margin | $165,000 | $15,000 | $15,000 | $135,000 |
| Traceable Fixed Expenses | $165,000 | $7,000 | $8,000 | $150,000 |
| Segment Margin | $0 | $8,000 | $7,000 | -$15,000 |
| Common Fixed Expenses | $5,000 | |||
| Net Operating Income | -$5,000 |
Expert Answer:
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Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Posted Date:
