If the bath department is dropped what will be the effect

Assignment Help Accounting Basics

Reference no: EM13484393

Boyle's Home Center, a retailing company, has two departments, Bath and Kitchen. The company's most recent monthly contribution format income statement follows:

			Department
	Total		Bath			Kitchen
Sales	$	4,230,000	$	1,100,000		$	3,130,000
Variable expenses		1,361,000		413,000			948,000

Contribution margin		2,869,000		687,000			2,182,000
Fixed expenses		2,170,000		810,000			1,360,000

Net operating income (loss)	$	699,000	$	(123,000	)	$	822,000

A study indicates that $377,000 of the fixed expenses being charged to the Bath Department are sunk costs or allocated costs that will continue even if the Bath Department is dropped. In addition, the elimination of the Bath Department would result in a 14% decrease in the sales of the Kitchen Department.

Required:

If the Bath Department is dropped, what will be the effect on the net operating income of the company as a whole? (Input the amount as a positive value.)

Reference no: EM13484393

Questions Cloud

Mickey corporation decided to discontinue its retail : presented below is pre-tax financial information of the mickey corporation for 20x8.cost of goods

Prepare a properly classified balance sheet for mccrery : following are all of the december 31 2014 balance sheet accounts of mccrery companyaccounts

On january 1 year one big company buys 10 percent of little : on january 1 year one big company buys 10 percent of little company for 200000 and has the ability to assert

Should a financial plan be considered an unbiased forecast : should a financial plan be considered an unbiased forecast of future cash flows earnings and other financial

If the bath department is dropped what will be the effect : boyles home center a retailing company has two departments bath and kitchen. the companys most recent monthly

A three-month treasury bill and a six-month bill both sell : a three-month treasury bill and a six-month bill both sell at a discount of 10 percent. which offers the higher annual

Suppose that the rate of inflation accelerates from 5 to : suppose that the rate of inflation accelerates from 5 to 10 percent per year. would firms cash balances go up or down

Why do firms grant cofee credit would it be more efficient : why do firms grant ?ofree?? credit? would it be more efficient if all sales were for cash and late payers were charged

If you were a credit manager to which financial ratios : if you were a credit manager to which financial ratios would you pay most attention? which do you think would be the

User Account

All Pages