The most recent monthly income statement for ABC Stores is given below: *Please answer fast...
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Accounting
The most recent monthly income statement for ABC Stores is given below:
*Please answer fast for a thumbs up and nice comment (:
Total
Store A
Store B
Sales..................................
1,200,000
$500,000
$700,000
Variable expenses.............
600,000
250,000
350,000
Contribution margin..........
600,000
250,000
350,000
Traceable fixed expenses..
400,000
100,000
300,000
Store segment margin.......
200,000
150,000
50,000
Common fixed expenses
150,000
62,505
87,495
Net operating income........
$ 50,000
$87,495
($ 37,495)
Due to its poor showing, consideration is being given to closing Store B. Studies show that if Store B is closed, one-third of its traceable fixed expenses will continue unchanged. The studies also show that closing Store B would result in a 50 percent increase in sales in Store A. The company allocates common fixed expenses to the stores on the basis of sales dollars.
Compute the overall increase or decrease in the company's operating income if Store B is closed. Show your work!
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