Answered step by step
Verified Expert Solution
Question
1 Approved Answer
(Click the icon to view the add-or-drop segments information.) Suarez Corporation runs two convenience stores, one in Connecticut and one in Rhode Island. Operating income
(Click the icon to view the add-or-drop segments information.) Suarez Corporation runs two convenience stores, one in Connecticut and one in Rhode Island. Operating income for each store in 2017 is as follows: (Click to view the operating income for the stores.) Read the requirements. Requirement 1. By closing down the Rhode Island store, Suarez can reduce overall corporate overhead costs by S51,000. Calculate Suarez's operating Income if it closes the Rhode Island store. Is Marla Lopez's statement about the effect of closing the Rhode Island store correct? Explain. Begin by calculating Suarez's operating Income if it closes the Rhode Island store. (Complete all answer boxes. Enter losses in revenues as a negative amount. amount with parentheses or a minus sign.) i Data Table (Loss In Revenues) 0 i Requirements Connecticut Rhode Island Store Store $ 1,070,000 S 820,000 690,000 Revenues Operating costs Cost of goods sold Lease rent (renewable each year) Labor costs (paid on an hourly basis) Depreciation of equipment Utilities (electricity, heating) Corporate overhead Total operating costs 780,000 91,000 75,000 1. By closing down the Rhode Island store, Suarez can reduce overall corporate overhead costs by $51,000. Calculate Suarez's operating Income If it closes the Rhode Island store. Is Maria Lopez's statement about the effect of closing the Rhode Island store correct? Explain. 2. Calculate Suarez's operating income if it keeps the Rhode Island store open and opens another store with revenues and costs identical to the Rhode Island store (including a cost of $26,000 to acquire equipment with a one-year useful life and zero disposal value). Opening this store will increase corporate overhead costs by $4,000. Is Maria Lopez's statement about the effect of adding another store like the Rhode Island store correct? Explain. Revenues Operating costs Cost of goods sold Lease rent (renewable each year) Labor costs (pald on an hourly basis) Depreciation of equipment Utilities (electricity, heating) Allocated corporate overhead Total operating costs 45,000 29,000 43,000 53,000 40,000 26.000 50,000 44,000 Print Effect on operating income (loss) Done 1,041,000 925,000 $ 29,000 S (105.000) Operating Income (loss)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started