Calculate the monthly financial advantage

Assignment Help Accounting Basics

Reference no: EM132825832

Problem 1:

The most recent monthly income statement for Benner Stores is given below:

	Total	Store A	Store B
Sales	54,000.000	81,600.000	$2,400,000
Variable expenses	2.520.000	640.000	I (3X0 Mx)
Contribution margin	1,680.000	960.000	720.000
Traceable fixed expenses	1 200 000	400.000	800 000
Store segment margin	480.000	3560 000	5f801001
Common fixed expenses	200 000
*Net* operating income	$280,000

Due to its poor showing, consideration is being given to closing Store B. Studies show that if Store B is closed, only one-fourth of its traceable fixed expenses will continue unchanged and the rest will be eliminated. The studies also show that closing Store B would result in a 10 percent decrease in sales and variable expenses in Store A.

Required:
Calculate the monthly financial advantage (disadvantage) to Benner Stores ofgi Store B and label whether it is an advantage or disadvantage.

Reference no: EM132825832

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