Reference no: EM131206529
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 $ 4,280,000 $ 3,190,000 $ 1,090,000 Variable expenses 1,330,000 923,000 407,000 Contribution margin 2,950,000 2,267,000 683,000 Fixed expenses 2,280,000 1,410,000 870,000 Net operating income (loss) $ 670,000 $ 857,000 $ (187,000 ) 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 the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 15% decrease in the sales of the Hardware Department.
Required: If the Linens Department is dropped, what will be the effect on the net operating income of the company as a whole?
|
What''s the marginal rate of substitution at bundle
: What's the marginal rate of substitution (MRS) at bundle (1,4)? What is the MRS at bundle (4, 1)? Give an example of a bundle where the MRS is -1.
|
|
Differs from analysis of traditional financial statements
: Prompt: Consider that a company is a nonprofit entity and a governmental entity. Discuss the reporting requirements for each and how they differ from a for-profit entity. Explain how you would address compliance with GAS in nonprofit and governmental..
|
|
Describe impact of various forms of competition on business
: Describe the impact of various forms of competition on business operations with emphasis on perfect competition. Use technology and information resources to research issues in principles of economics.
|
|
Decision as well as irrelevant costs and sunk costs
: Pretend you are a manager of Ford Motor Company. You have been asked to determine whether a product (one of your choosing) should be manufactured in-house or outsourced to another vendor. Discuss the relevant costs you would consider for this decisio..
|
|
Effect on the net operating income of the company as whole
: Bed & Bath, a retailing company, has two departments, Hardware and Linens. The company’s most recent monthly contribution format income statement follows: If the Linens Department is dropped, what will be the effect on the net operating income of the..
|
|
Prepare company flexible budget for based on actual level
: During April, Elsa Corporation budgeted for 27,000 customers, but actually served 23,000 customers. The company uses the following revenue and cost formulas in its budgeting, where q is the number of customers served: Revenue: $4.10q Wages and salari..
|
|
What is the companys warranty expense for the month
: A company sells computers for $1,600 each. Each computer has a two-year warranty that covers replacement of defective parts. It is estimated that 2% of all computers sold will be returned under the warranty with an average cost of $186 each. What is ..
|
|
Case study essay on martin shkreli fraud case
: Question: Case Study Essay on Martin Shkreli Fraud Case. What fraud or other financial malfeasance took place (and was proven, not speculated)
|
|
Labor data for making one gallon of finished product
: Labor data for making one gallon of finished product in Tang Company are as follows: (1) Price—hourly wage rate $13.75, payroll taxes $0.52, and fringe benefits $1.54. (2) Quantity—actual production time 1.21 hours, rest periods and cleanup 0.34 hour..
|