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The Boot Department at the Omaha Department Store is being considered for closure. The following...

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Accounting

The Boot Department at the Omaha Department Store is being considered for closure. The following information relates to boot activity: Sales revenue $ 360,000 Variable costs: Cost of goods sold 287,000 Sales commissions 32,000 Fixed operating costs 97,000.

If 80% of the fixed operating costs are avoidable, should the Boot Department be closed?

Multiple Choice

  • Yes, Omaha would be better off by $36,600.

  • Yes, Omaha would be better off by $56,000.

  • No, Omaha would be worse off by $21,600.

  • No, Omaha would be worse off by $41,000.

  • None of the answers is correct.

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