Reference no: EM13575536
Condensed monthly operating income data for Cosmo Inc. for November 2000 is presented below. Additional information regarding Cosmo's operation follows the statement.
Total Hall Store Town Store
Sales P200,000 P80,000 P120,000
Less Variable costs 116,000 32,000 84,000
-----------------------------------------------------------------------------------------
Contribution margin P 84,000 P48,000 P36,000
Less direct fixed expense 60,000 20,000 40,000
-------------------------------------------------------------------------------------------
Store segment margin P 24,000 P28,000 P( 4,000)
Less common fixed expenses 10,000 4,000 6,000
----------------------------------------------------------------------------------------------
Operating income P 14,000 P24,000 P(10,000)
One-fourth of each store's direct fixed expenses would continue through December 31, 2001, if either store were closed.
Management estimates that closing the Town Store would result in a ten percent decrease in Hall Store. Hall Store would not affect Town Store sales. The operating results for November 2000 are representative of all months.
A decision of Cosmo, Inc. to close the Town Store would result in amonthly increase (decrease) in Cosmo's operating income during2001 of?