Reference no: EM132804293

Question - The student association of Simcoe University runs two bars on campus. Current Financial info: (in 000)

Clean-Pub Sticky-Floor Total

Sales 43.0 15.1 58.1

Cost of Goods Sold 30.0 8.0 38.0

Rent 5.0 4.0 9.0

Labour 4.0 3.0 7.0

Administrative 3.0 2.0 5.0

All of the Cost of Goods Sold is for consumable items (beer, soft-drinks, other drinks)

All of the Rent is part of a long-term lease. The lease cannot be broken.

The lease at the Sticky-Floor is about to end and the student association is considering if they should renew the lease or close this location. If the Sticky-Floor is closed:

Sales at Clean-Pub will increase by 30%.

Discounts on consumable items will be lost, resulting in a price increase of 5% for these items.

Clean-Pub will have to rent more space - this will increase rent from $5 to $8 per year.

If Sticky-Floor is closed, all of its labour costs can be avoided.

Administrative costs (payroll, purchasing, accounts payable) are shared between the two pubs. $1.0 of these costs can be eliminated if the Sticky-floor is closed.

What is student association's total net income if the stick-floor is closed or not closed?