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The Boot Department at the Omaha Department Store is being considered for closure. The following information relates to boot activity:
| | | | |
| Sales revenue | $ | 350,000 | |
| Variable costs: | | | |
| Cost of goods sold | | 280,000 | |
| Sales commissions | | 30,000 | |
| Fixed operating costs | | 90,000 | |
| |
If 70% of the fixed operating costs are avoidable, should the Boot Department be closed?
Multiple Choice
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Yes, Omaha would be better off by $23,000.
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Yes, Omaha would be better off by $50,000.
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No, Omaha would be worse off by $13,000.
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No, Omaha would be worse off by $40,000.
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None of the answers is correct.
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