1a. The Boot Department at the Omaha Department Store is being considered for closure. The following information relates to boot activity:

Sales revenue	$	360,000
Variable costs:
Cost of goods sold		285,000
Sales commissions		35,000
Fixed operating costs		95,000

If 80% of the fixed operating costs are avoidable, should the Boot Department be closed?

Multiple Choice

• Yes, Omaha would be better off by $36,000.

• Yes, Omaha would be better off by $55,000.

• No, Omaha would be worse off by $21,000.

• No, Omaha would be worse off by $40,000.

• None of the answers is correct.

1b. Consider the following data of Twisted Corporation's Northern Division:

Sales revenue	$26,250,000
Capital turnover	?
Average invested capital	?
Sales margin	4.0	%
Income	?
Return on investment	15.0	%
Residual income	?
Twisteds imputed interest rate	12.0	%

- Calculate Northerns capital turnover. (Round your answer to 2 decimal places.) -. Calculate Northerns average invested capital. -. Calculate Northerns income. -. Calculate residual income.