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both questions please aspa Cats Shop Here is a retailer in British Columbia. The most recent monthly income statement for Cats Shop Here is given
both questions please aspa
Cats Shop Here is a retailer in British Columbia. The most recent monthly income statement for Cats Shop Here is given below: Sales Less variable expense Contribution margin Less traceable fixed expense Segment margin Less common fixed expense Operating Income Store A Store B Total $1,300,000 $1,665,000 $2,965,000 850.000 $958.000 1.808.000 $450,000 $707,000 $1,157,000 430,000 378,000 808,000 $20,000 $329,000 $349,000 120,000 140,000 260,000 S(100.000) $189,000 $89.000 Cats Shop Here is considering closing Store A. If Store A is closed, one-fourth of its traceable fixed expenses would continue to be incurred. Also, the closing of Store A would result in a 20% increase in sales in Store B as loyal shoppers are expected to travel to shop at Store B if Store A is closed. Cats Shop Here allocates common fixed expenses on the basis of sales dollars and none of these costs would be saved if a store were shut down. QUESTION 1 Should Cats Shop Here close Store A? (Show all calculations) (6 points) QUESTION 2 What is the decision rule for this type of scenario? (1 point) Step by Step Solution
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