Question
Downtown Store Mall Store Total Sales $ 257,000 $ 394,000 $ 651,000 Less: Variable expenses 102,800 272,400 375,200 Contribution margin $ 154,200 $ 121,600 $
Downtown Store | Mall Store | Total | |||||||
Sales | $ | 257,000 | $ | 394,000 | $ | 651,000 | |||
Less: Variable expenses | 102,800 | 272,400 | 375,200 | ||||||
Contribution margin | $ | 154,200 | $ | 121,600 | $ | 275,800 | |||
Less: Fixed expenses | 65,100 | 137,000 | 202,100 | ||||||
Operating income | $ | 89,100 | $ | (15,400 | ) | $ | 73,700 |
Calculate the increase or decrease in Boundaries monthly operating income during 20x5 if the mall store is closed. 2. The management of Boundaries is considering a promotional campaign at the mall store that would not affect the downtown store. Annual promotional expenses at the mall store would be increased by $180,000 in order to increase mall store sales by 10 percent. What would be the effect of this promotional campaign on the companys monthly operating income during 20x5? 3. One-half of the mall stores dollar sales are from items sold at their variable cost to attract custom- ers to the store. Boundaries management is considering the deletion of these items, a move that would reduce the mall stores direct fixed expenses by 15 percent and result in the loss of 20 percent of the remaining mall stores sales volume. This change would not affect the downtown store. What would be the effect on Boundaries monthly operating income if the items sold at their variable cost are eliminated? Only need an anser to this one: Build a spreadsheet: Construct an Excel spreadsheet to solve all of the preceding requirements. Show how the solution will change if the following information changes: the downtown stores sales amounted to $235,000, and its variable expenses were $90,000.
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