The most recent monthly income statement for Sun Shine Corporation is given below: ...
70.2K
Verified Solution
Link Copied!
Question
Accounting
The most recent monthly income statement for Sun Shine Corporation is given below:
Total
Store A
Store B
Sales
$1,000,000
$400,000
$600,000
Variable expenses
580,000
160,000
420,000
Contribution margin
420,000
240,000
180,000
Traceable fixed expenses
300,000
100,000
200,000
Store segment margin
120,000
140,000
(20,000)
Common fixed expenses
50,000
20,000
30,000
Net operating income
$70,000
$120,000
$(50,000)
Due to its poor showing, consideration is being given to closing Store B. Studies show that if Store B is closed, one fourth of its traceable fixed expenses will continue unchanged. The studies also show that closing Store B would result in a 10 percent decrease in sales in Store A. The company allocates common fixed expenses to the stores on the basis of sales dollars.
Required:
Determine the monthly financial advantage (disadvantage) of closing Store B. (Provide side by side comparison calculations)
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
