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A segmented contribution margin statement for Cleen Inc. for November 2022 is presented below. Additional information regarding Cleen Inc.'s operations follows the statement. Victoria
A segmented contribution margin statement for Cleen Inc. for November 2022 is presented below. Additional information regarding Cleen Inc.'s operations follows the statement. Victoria Store Zambra Store Total Sales Less: Variable costs $85,000 $121,000 $206,000 $34,000 $84,700 $118,700 Contribution margin $51,000 $36,300 $87,300 Less: Direct fixed costs $24,000 $45,000 $69,000 Store segment margin $27,000 $-8,700 $18,300 Less: Common fixed costs $6,000 $6,000 $12,000 Operating Income $21,000 $-14,700 $6,300 Each store's direct fixed costs would be eliminated if either store were closed and the closed store's common fixed costs would be allocated to the store that remained open. Cleen Inc. allocates common fixed costs to each store equally. Management estimates that closing the Zambra Store would result in a 7% decrease in Victoria Store sales, while closing the Victoria Store would not affected Zambra Store sales. Do not enter dollar signs or commas in the input boxes. Only use the negative sign for a decrease in operating income. a) What is the change in total operating income if Cleen Inc. decides to close the Zambra Store? Zambra Store's contribution margin Zambra Store direct fixed costs Victoria Store lost contribution margin Change in total operating income b) Cleen Inc. is considering a promotional campaign at the Zambra Store that would not affect the Victoria Store. The extra promotional cost of $3,100 is expected to increase sales by 10%. What is the change in operating income?
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