Drexel Hall segmented income statement for the current month.

Profit Centers

Drexel HillStore1 Store2 Store3

Dollars, % dollars, % dollars, % dollars, %

Sales $1,800,000, 100% $600,000, 100%$600,000, 100%$600,000 100%

Var.costs1,080,000, 60% 372,000, 62%,378,000,63%,330,000, 55%

CM720000,40% 228000, 38%,222000, 37%, 270000,45%

Treaceable F. cost:

Controllable:432000,24% 120000,20%, 102000,17% 210000, 35%

Perform. Margin288000, 16% 108000 18% 120000, 20% 60000,10%

Traceable F. cost:

committed180000, 10% 48000, 8% 66000, 11% 66000, 11%

Responsibilty

Margin:108000, 6% 60000, 10%54000, 9% (6000),(1%)

Common

Fixed costs36000, 2%

Income from

Operations:72000, 4%

All stores are similar in size, carry similar products, and operate in similar neighborhoods. Store 1 was established first and was built at a lower cost than were Stores 2 and 3. This lower cost results in less depreciation expense for Store 1. Store 2 follows a policy of minimizing both costs and sales prices. Store 3 follows a policy of providing extensive customer service and charges slightly higher prices than the other two stores.

Top management of Drexel-Hall is considering closing Store 3. The three stores are close enough together that management estimates closing Store 3 would cause sales at Store 1 to increase by $60,000, and sales at Store 2 to increase by $120,000. Closing Store 3 is not expected to cause any change in common fixed costs.

Required:

a.What is the total monthly sales for Drexel-Hall stores.

b.What is the monthly responsibility margin of Stores 1 and 2.

c.What is the company's monthly income from operations.