A retail company has two departments indoor and outdoor the

Reference no: EM13576535

A retail company has two departments, indoor and outdoor. The company's most recent monthly contribution format income statement is presented below.
Total Outdoor Indoor

Sales $4,800,000 $1,200,000 $3,600,000
Variable Expenses 1,800,000 400,000 1,400,000
Contribution Margin 3,000,000 800,000 2,200,000
Fixed expenses 2,800,000 1,000,000 1,800,000

Net operating income $200,000 $(200,000) $400,000

A study indicates that $400,000 of the fixed expenses being charged to the Outdoor department are sunk costs, or allocated costs that will continue even if the Outdoor department is dropped. In addition, the elimination of the Outdoor department would resuld in a 10% decrease in the sales of the Indoor department.

Ignore the impact of income taxes in your calculation.If the Outdoor deparment is dropped, what will be the effect on the net operating income of the company as a whole?

Reference no: EM13576535

Questions Cloud

Becky lewis estimates that she will need 30000 in five : becky lewis estimates that she will need 30000 in five years for a down payment on a new home. what amount would she

What does this mean and what is the significance of the : discussion question-1 answer in 3- paragraphs apa style and cite work please provide referencesdiscussion question 1one

Froment corporation uses the weighted-average method in its : froment corporation uses the weighted-average method in its process costing system. this month the beginning inventory

John owns 30 of outstanding stock of wally and has the : john owns 30 of outstanding stock of wally and has the ability to significanlty influence the investees operations and

A retail company has two departments indoor and outdoor the : a retail company has two departments indoor and outdoor. the companys most recent monthly contribution format income

This mistake had a material effect on the amount of income : a review of the notes payable files discovers that three years ago the company reported the entire amount of a payment

On january 1 jkr shop had 490000 of inventory at cost in : on january 1 jkr shop had 490000 of inventory at cost. in the first quarter of the year it purchased 1630000 of

Bones and skeletal tissues this is the same questions as : this is the same questions as sent a 10 min ago. ltbrgtaddition quotjustified ideas and responses through appropriate

At january 1 2010 the credit balance in the allowance for : at january 1 2010 the credit balance in the allowance for doubtful accounts of the master company was 40000. for 2010

User Account

All Pages