Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Fixed expenses Contribution margin Net operating income (loss) Department Total $ 4,280,000 Hardware $ 3,090,000 Linens $ 1,190,000 408,000 782,000 880,000 1,314,000 2,966,000 2,220,000 $ 746,000 906,000 2,184,000 1,340,000 $ 844,000 $ (98,000) A study indicates that $378,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 16% decrease in the sales of the Hardware Department. Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? Answer is complete but not entirely correct. Financial (disadvantage) $ 525,750 < Prev 5 of 6 Next > Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Fixed expenses Contribution margin Net operating income (loss) Department Total $ 4,280,000 Hardware $ 3,090,000 Linens $ 1,190,000 408,000 782,000 880,000 1,314,000 2,966,000 2,220,000 $ 746,000 906,000 2,184,000 1,340,000 $ 844,000 $ (98,000) A study indicates that $378,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 16% decrease in the sales of the Hardware Department. Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? Answer is complete but not entirely correct. Financial (disadvantage) $ 525,750 < Prev 5 of 6 Next >
Expert Answer:
Posted Date:
Students also viewed these accounting questions
-
State the law of diminishing marginal returns. How is it illustrated by the data in the table of the preceding question? There is a proviso to this law that certain things be held constant: What are...
-
\(F V=\$ 15,000, t=16\) years, annual simple interest rate of \(3.5 \%\) Find the present value for the given future value, \(F V\), annual simple interest rate \(r\), and number of years \(t\).
-
What is the purpose of a packing group? How many packing groups exist?
-
1. Does repatriation represent a good financial strategy for firms with international employees? 2. Besides cost savings, does i2 have anything to gain by repatriating its Indian employees? In an...
-
Test the claim that the proportion of men who own cats is smaller than 40% at the .01 significance level. The null and alternative hypothesis would be: H0:p=0.4H0:p=0.4 H1:p0.4H1:p0.4...
-
It can take years to change the attitudes and culture within organization. Leaders should encourage a BRM mindset that creates environments where employees are encouraged to look across Portfolios,...
-
Focusing on TAKT time, consider the following. a. You have product demand of 800 units per day. You currently work one 8-hour shift, with 7.5 real work hours. What is your TAKT time? b. Your demand...
-
Discuss and address why it is favorable to treat suppliers as partners for a mutually beneficial long-term relationship versus treating suppliers more on a transactional basis as adversaries. Ensure...
-
The following information is for Winter Break Hotel. Given the information, questions from #12 to #15. o Average room selling price: $65 o Average variable cost per room: $17 o Annual total fixed...
-
7.9 Answer each of the following. Assume that unsigned integers are stored in 2 bytes and that the starting address of the array is at location 1002500 in memory. a. Define an array of type unsigned...
-
An organization must prepare for change to ensure that any change initiative will likely succeed. Therefore, to increase the probability of a successful change initiative, leaders need the ability to...
-
Hello, I would like help in understanding how to actually calculate financials 1,2,3,4,5 based on the information provided in the case. This is practice and I need to understand these types of...
-
Have you ever practiced raising an ethical issue to a professor or to your manager? What did you do? What were the results? 47
-
What conditions would make accepting a gift from a vendor or a client acceptable? jj5
-
Is sexual harassment as important an issue for men as it is for women? j5
Study smarter with the SolutionInn App