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Condensed monthly operating income data for Cosmo lInc. for November is presented below. Additional information regarding Cosmo's operations follows the statement. Total Mall Store Sales
Condensed monthly operating income data for Cosmo lInc. for November is presented below. Additional information regarding Cosmo's operations follows the statement. Total Mall Store Sales Town Store $ $ $ Less variable costs Contribution margin Less traceable fixed
expenses Store segment margin Less common fixed expenses Operating income
$
$
$
Threequarters of each store's traceable fixed expenses are avoidable if the store were to be closed. Cosmo allocates common fixed expenses to each store on the basis of sales dollars. Management estimates that closing the Town Store would result in a ten percent decrease in Mall Store sales, while closing the Mall Store would not affect Town Store sales. The operating results for November are representative of all months.
Cosmo is considering a promotional campaign at the Town Store that would not affect the Mall Store. Increasing annual promotional expenses at the Town Store by $ in order to increase Town Store sales by ten percent would result in a monthly increase decrease in Cosmo's operating income of
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