Homework Answers
Answer 1:
Net Income is $ 96,000.
The Rhode Island Store should be closed.
Working note:
| Statement of Incremental analysis | |
| Particulars | Amount |
| Revenues | $ 1,070,000.00 |
| Less: Expenses | |
| COGS | $ 700,000.00 |
| Lease rent | $ 87,000.00 |
| Labor cost | $ 47,000.00 |
| Depreciation | $ 51,000.00 |
| Utilities | $ 40,000.00 |
| Overheads | $ 49,000.00 |
| Net Income | $ 96,000.00 |
Answer 2:
The net income is $ 36,000.
Another store should ot be added.
| Statement of Incremental analysis | |
| Particulars | Amount |
| Revenues | $ 2,710,000.00 |
| Less: Expenses | |
| COGS | $ 2,000,000.00 |
| Lease rent | $ 241,000.00 |
| Labor cost | $ 131,000.00 |
| Depreciation | $ 76,000.00 |
| Utilities | $ 130,000.00 |
| Overheads | $ 96,000.00 |
| Net Income | $ 36,000.00 |
Calculation:
| Statement of Incremental analysis | |
| Particulars | Amount |
| Revenues | =1070000+820000+820000 |
| Less: Expenses | |
| COGS | =700000+650000+650000 |
| Lease rent | =87000+77000+77000 |
| Labor cost | =47000+42000+42000 |
| Depreciation | =26000+25000+25000 |
| Utilities | =40000+45000+45000 |
| Overheads | =52000+37000+7000 |
| Net Income | =H75-SUM(H77:H82) |
In case of any doubt, please comment.
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Total
Uptown Store
Downtown Store
Westpark Store
Sales
$2,500,000
$900,000
$600,000
$1,000,000
Cost of goods sold
1,450,000
513,000
372,000
565,000
Gross margin
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387,000
228,000
435,000
Selling and administrative expenses:
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Direct advertising
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40,000
36,000
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General advertising*
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4,800
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Delivery salaries
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statement for the last quarter for its three metropolitan stores is
given below:
Total
Uptown Store
Downtown Store
Westpark Store
Sales
$2,500,000
$900,000
$600,000
$1,000,000
Cost of goods sold
1,450,000
513,000
372,000
565,000
Gross margin
1,050,000
387,000
228,000
435,000
Selling and administrative expenses:
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Direct advertising
118,500
40,000
36,000
42,500
General advertising*
20,000
7,200
4,800
8,000
Sales salaries
157,000
52,000
45,000
60,000
Delivery salaries
30,000
10,000
10,000
10,000
Store rent
215,000...
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