What risks may be associated with leasing to retail stores

Assignment Help Managerial Accounting

Reference no: EM133445367

Case Study: The privately owned Baker Company was founded in 1960. The company manufactures kitchen cabinets and has been very successful, expanding from one facility to twelve facilities in the same and other states. All facilities but the original are located near interstate highways. The original facility, which is no longer the headquarters, is in a downtown area of a major city (which grew up around it) with relatively high real-estate taxes. It has had a negative contribution margin and a net loss for the last five years. The founder is retired and three of his children want to close the facility. The fourth does not, because it "was Dad's first place and I went there every day after school." She believes they can bring the facility back to profitability if the city's downtown revitalization project succeeds and they dedicate the first floor of the facility to retail.

Question: Your definition for "negative contribution margin."

Whether the fact that the facility is not near an interstate makes a difference in the decision.

Would it make a difference if the company were publicly traded?

Might there be additional costs, in addition to revenues, to convert the first floor of the facility to retail?

What risks may be associated with leasing to retail stores?

What is your recommendation? Close and sell the facility or modify the first floor to be able to lease to retail stores.

Reference no: EM133445367

Questions Cloud

Provide example of evidence based policy : Provide an example of an evidence based policy that you would like to implement in your practice. How will you implement it?

Why was the peace process at the wars end so lengthy : Why was the peace process at the war's end so lengthy? What complications did Wilson encounter in his attempts to promote the process.

What referral options and resources are available : What referral options and resources are available in community and health care settings for a person with disability or complex health needs in Victoria

What postoperative complications should the nurse anticipate : What postoperative complications should the nurse anticipate? How can these be prevented?

What risks may be associated with leasing to retail stores : Would it make a difference if the company were publicly traded? Might there be additional costs, in addition to revenues, to convert the first floor of the

Describe the research methodology : Describe the research methodology used to calculate the statistics you calculated.

What do you think about this : What do you think about this? Have any of you been called to something that you initially felt completely unprepared or unqualified for? How did you handle

Evidence based policy : Provide an example of an evidence based policy that you would like to implement in your practice. How will you implement it?

Explain what omega-3 fatty acids are available : Explain what omega-3 fatty acids are available in your area and their benefits to heart disease prevention by following the discussion prompts

User Account

All Pages