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What problem might the company experience

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Question: Please show detailed claculations/reason why ( Especially B & C)

"It's close to a $40,000 loser and we ought to devote our efforts elsewhere," noted Karenne Whitmore, after reviewing financial reports of her company's attempt to offer a reduced-price daycare service to employees. The daycare's financial figures for the year just ended follow.

Revenues $12,000.00 Variable Costs $45,000.00 Traceable Fixed Costs $89,000.00 Allocated Corporate Overhead $24,000.00.

If the daycare service/center is closed, 70% of the traceable fixed cost will be avoided. In addition, the company will incur one-time closure costs of $6,800.

A. Show calculations that support Whitmore's belief that the daycare center lost almost $40,000.

B. Should the center be closed? Show calculations to support your answer.

C. What problem might the company experience if the centers are closed?

Reference no: EM131751870

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