Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Blossom Manufacturing has manufacturing facilities in several locations. One of Blossom's facilities has been showing losses over several quarters, and management is considering closing the

image text in transcribed
Blossom Manufacturing has manufacturing facilities in several locations. One of Blossom's facilities has been showing losses over several quarters, and management is considering closing the facility. If the facility is closed, only two part-time employees will be retained by Blossom. The annual wage of each part-time worker is $15600. This particular locationhas been in operation for many years. As a result, the manufacturing equipment has no resale value. Following is the most recent income statement for the facility: Sales $3662000 Less: Variable expenses 2564000 Contribution margin 1098000 Less: Fixed expenses Wages 685200 Insurance 178000 Depreciation 295200 Advertising 23200 Operating income $(83600) What would be the impact on Blossom's overall operating income if the manufacturing facility is eliminated? Decrease by $242800 per year. Increase by $83600 per year. Increase by $326400 per year. Decrease by $227200 per year

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Understanding Corporate Annual Reports

Authors: William Pasewark

7th Edition

0073526932, 9780073526935

More Books

Students also viewed these Accounting questions

Question

Pay him, do not wait until I sign

Answered: 1 week ago

Question

Speak clearly and distinctly with moderate energy

Answered: 1 week ago