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Closing the Town Store would result in 35% of its traceable fixed continuing and a 20% increase in Mall Store sales and variable costs. Use
Closing the Town Store would result in 35% of its traceable fixed continuing and a 20% increase in Mall Store sales and variable costs. Use the following data to determine the increase (decrease) in Cosmo's operating income if the Town store is closed. Mall Town Total Store Store Sales............. $ 260,000 $140,000 $120,000 Less variable costs. 174,000 90,000 84,000 Contribution margin........... $ 86,000 $ 50,000 $ 36,000 Less traceable fixed expenses.. _60,000 28,000 | 32.000 Store segment margin............. ..$ 26,000 $ 22,000 $ 4,000 Less common fixed expenses.... 12.000 7,000 5,000 Operating income............ $_14,000 $ 15,000 $(_1,000 OA $ 1,000 OB. $ (5,200). Oc. $ (15,200). OD. $ (14,800) OE. $ (24,800)
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