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2B Drop or Retain a Segment Fresh Juice has three locations in Kamloops: Downtown, North Shore and Dufferin. Management is concerned about the performance of
2B Drop or Retain a Segment Fresh Juice has three locations in Kamloops: Downtown, North Shore and Dufferin. Management is concerned about the performance of the downtown location, the rent is high and management is debating closing the store. A company-wide segmented income statement follows: Sales Variable expenses Downtown $300,000 210,000 North Shore $350,000 225,000 Dufferin $250,000 175,000 75,000 Total $900,000 610.000 290,000 Contribution margin 90,000 125,000 Fixed expenses Operating income (loss) 150,000 $(60,000) 75,000 $50,000 40,000 $35,000 265,000 $25,000 An analysis of expenses reveals that if $40,000 of the downtown location's fixed expenses are allocated costs that would continue even if the store was closed. The North Shore and Dufferin locations could expect a 5% decrease in revenues due to lost promotional synergies closing the prominent downtown location. Required Compute the net dollar advantage or disadvantage of dropping the downtown location
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