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 even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 13% decrease in the sales of the Hardware Department.
Required:
What is the financial advantage (disadvantage) of discontinuing the Linens Department?
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 $ 4,350,000 $ 3,190,000 $ 1,160,000 Variable expenses 1,309,000 908,000 401,000 Contribution margin 3,041,000 2,282,000 759,000 Fixed expenses 2,350,000 1,450,000 900,000 Net operating income (loss) $ 691,000 $ 832,000 $ (141,000 ) A study indicates that $374,000 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: Department Total Hardware Linens Sales $ 4,340,000 $ 3,180,000 $ 1,160,000 Variable expenses 1,218,000 808,000 410,000 Contribution margin 3,122,000 2,372,000 750,000 Fixed expenses 2,240,000 1,340,000 900,000 Net operating income (loss) $ 882,000 $ 1,032,000 $ (150,000 ) 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 $ 4,230,000 $ 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 $ 4,330,000 3,180,000 $ 1,150,000 Sales Variable expenses 987,000 1,396,000 409,000 Contribution margin 2,934,000 2,193,000 741,000 Fixed expenses 2,340,000 1,490,000 850,000 $ 703,000 $ (109,000) 594,000 $ Net operating income (loss) 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...
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...
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 Nat operating Income (los) Department Total Hardware Linens $ 4,260,000 $3,140,000 $1,120,000 1,370,000 958,000 412,000 2,890,000 2,182,000 708,000 2,170,000 1,310,000 B60,000 $ 720,000 $ 872,000 $ (152,000) A study indicates that $372,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the...
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 $ 4,330,000 $ 3,190,000 $1,140,000 Variable expenses Contribution margin 1,385,000 967,000 418,000 2,945,000 2,223,000 722,000 Fixed expenses 2,320,000 1,450,000 870,000 Net operating income (1oss) 625,000 77३,०00 । (148,000) A study indicates that $378,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens...
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 Department Total Hardware Linens $ 4,290,000 $3,150,000 $ 1,140,000 1,396,000 986,000 410,000 2,894,000 2,164,000 730,000 2,320,000 1,430,000 890,000 $ 574,000 $ 734,000 $ (160,000) Net operating income (loss) A study indicates that $376,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if...
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...