Computer boutique sells computer equipment and home office

Assignment Help Auditing

Reference no: EM13376638

Computer Boutique sells computer equipment and home office furniture. Currently, the furniture product line takes up approximately 50% of the company's retail floor space.

The president of Computer Boutique is trying to decide whether the company should continue offering furniture or just concentrate on computer equipment. If furniture is dropped, salaries and other direct fixed costs can be avoided. In addition, sales of computer equipment can increase by 13%. Allocated fixed costs are assigned based on relative sales.

	Computer	Home Office
	Equipment	Furniture		Total
Sales	$1,200,000		$800,000	$2,000,000
Less cost of goods sold	$700,000		$500,000	$1,200,000
Contribution margin	$500,000		$300,000	$800,000
Less direct fixed costs
Salaries	$175,000		$175,000	$350,000
Other	$60,000		$60,000	$120,000
Less allocated fixed costs
Rent	$14,118		$9,882	$24,000
Insurance	$3,529		$2,471	$6,000
Cleaning	$4,117		$2,883	$7,000
President's salary	$76,470		$53,350	$130,000
Other	$7,058		$4,942	$12,000
Total costs	$340,292		$308,528	$649,000
Net Income	$159,708		($8,528)	$151,180

Reference no: EM13376638

Questions Cloud

Topper sports inc produces high quality sports equipment : topper sports inc. produces high quality sports equipment. the companys racket division manufactures three tennis

Following is the adjusted trial balance of post company : following is the adjusted trial balance of post company. based on this information prepare a balance sheet income

An equipment acquisition proposal was being considered by a : an equipment acquisition proposal was being considered by a large health care organization. the array machine will

As the representative from your accounting firm or practice : as the representative from your accounting firm or practice you are in charge of stock market analysis that will be

Computer boutique sells computer equipment and home office : computer boutique sells computer equipment and home office furniture. currently the furniture product line takes up

Algers company produces dry fertilizer at the beginning of : algers company produces dry fertilizer. at the beginning of the year algers had the following standard cost sheetdirect

Select a publicly quoted company obtain the annual report : select a publicly quoted company. obtain the annual report 10-k of the company for the immediate past year. an

Scenario - ahi corporation is one of your clients in hawaii : scenario - ahi corporation is one of your clients in hawaii. the company had a good year last year and owes the irs

Internal financial information is not available to the : internal financial information is not available to the public so we have to rely on external information for our

User Account

All Pages