Solution
Net financial Disadvantage of Discontinuing linens department | $ (460,020) |
Working
Net operating income before discontinuing linens | $ 720,000 |
Net operating income after discontinuing linens | $ 259,980 |
Net financial Disadvantage of Discontinuing linens department | $ 460,020 |
.
Working | Total | Hardware | Linens | |
A | Sales | $ 2,794,600 | $ 2,794,600 | |
B | Variable expenses | $ 852,620 | $ 852,620 | |
C=A-B | Contribution margin | $ 1,941,980 | $ 1,941,980 | $ 0 |
D | Fixed expenses | $ 1,682,000 | $ 1,310,000 | $ 372,000 |
E=C-D | Net Operating Income (Loss) | $ 259,980 | $ 631,980 | -$ 372,000 |
If linen is discontinued all sales revenue and variable cost will be eliminated but fixed cost of 372000 will still be incurred which increase the loss from $152000 to $372000.
Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly...
Bed & Bath, a retailing company, has two departments—Hardware and Linens. The company’s most recent monthly contribution format income statement follows: Department Total Hardware Linens Sales $ 4,130,000 $ 3,100,000 $ 1,030,000 Variable expenses 1,358,000 942,000 416,000 Contribution margin 2,772,000 2,158,000 614,000 Fixed expenses 2,170,000 1,310,000 860,000 Net operating income (loss) $ 602,000 $ 848,000 $ (246,000 ) A study indicates that $376,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue...
Bed & Bath, a retailing company, has two departments—Hardware and Linens. The company’s most recent monthly contribution format income statement follows: Department Total Hardware Linens Sales $ 4,050,000 $ 3,040,000 $ 1,010,000 Variable expenses 1,330,000 923,000 407,000 Contribution margin 2,720,000 2,117,000 603,000 Fixed expenses 2,130,000 1,310,000 820,000 Net operating income (loss) $ 590,000 $ 807,000 $ (217,000 ) A study indicates that $372,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue...
Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Department Total Hardware Linens $ 4,290,000 $ 3,110,000 $ 1,180,000 1,403,000 985,000 418,000 2,887,000 2,125,000 762,000 2,210,000 1,370,000 840,000 $ 677,000 $ 755,000 $ (78,000) A study indicates that $380,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even...
Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Department Total Hardware Linens $ 4,310,000 $ 3,150,000 $ 1,160,000 1,319,000 912,000 407,000 2,991,000 2,238,000 753,000 2,270,000 1,370,000 900,000 $ 721,000 $ 868,000 $ (147,000) A study indicates that $378,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even...
Bed & Bath, a retailing company, has two departments—Hardware and Linens. The company’s most recent monthly contribution format income statement follows: Department Total Hardware Linens Sales $ 4,080,000 $ 3,060,000 $ 1,020,000 Variable expenses 1,229,000 815,000 414,000 Contribution margin 2,851,000 2,245,000 606,000 Fixed expenses 2,170,000 1,340,000 830,000 Net operating income (loss) $ 681,000 $ 905,000 $ (224,000 ) A study indicates that $376,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue...
Bed & Bath, a retailing company, has two departments—Hardware and Linens. The company’s most recent monthly contribution format income statement follows: Department Total Hardware Linens Sales $ 4,180,000 $ 3,010,000 $ 1,170,000 Variable expenses 1,315,000 912,000 403,000 Contribution margin 2,865,000 2,098,000 767,000 Fixed expenses 2,170,000 1,360,000 810,000 Net operating income (loss) $ 695,000 $ 738,000 $ (43,000 ) A study indicates that $375,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue...
Bed & Bath, a retailing company, has two departments—Hardware and Linens. The company’s most recent monthly contribution format income statement follows: Department Total Hardware Linens Sales $ 4,180,000 $ 3,050,000 $ 1,130,000 Variable expenses 1,233,000 830,000 403,000 Contribution margin 2,947,000 2,220,000 727,000 Fixed expenses 2,270,000 1,370,000 900,000 Net operating income (loss) $ 677,000 $ 850,000 $ (173,000 ) A study indicates that $376,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue...
Bed & Bath, a retailing company, has two departments—Hardware and Linens. The company’s most recent monthly contribution format income statement follows: Department Total Hardware Linens Sales $ 4,170,000 $ 3,120,000 $ 1,050,000 Variable expenses 1,301,000 891,000 410,000 Contribution margin 2,869,000 2,229,000 640,000 Fixed expenses 2,340,000 1,470,000 870,000 Net operating income (loss) $ 529,000 $ 759,000 $ (230,000 ) A study indicates that $372,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue...
Bed & Bath, a retailing company, has two departments—Hardware and Linens. The company’s most recent monthly contribution format income statement follows: Department Total Hardware Linens Sales $ 4,230,000 $ 3,050,000 $ 1,180,000 Variable expenses 1,258,000 839,000 419,000 Contribution margin 2,972,000 2,211,000 761,000 Fixed expenses 2,250,000 1,440,000 810,000 Net operating income (loss) $ 722,000 $ 771,000 $ (49,000 ) A study indicates that $371,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue...
Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Department Hardware Linens Total $ 4,240,000 $ 3,120,000 ş1,120,000 Sales Variable expenses 1,335,000 934,000 401,000 Contribution margin 2,186,000 719,000 2,905,000 Fixed expenses 2,130,000 1,330,000 800,000 775,000 $ 856,000 $ Net operating income (loss) (81,000) A study indicates that $377,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the...