Question
G Company has three stores known as Big, Medium, and Small respectively. Total Sales from the three stores were $1,500,000 this last year. Information from
G Company has three stores known as Big, Medium, and Small respectively. Total Sales from the three stores were $1,500,000 this last year. Information from the accounting information system on recent performance is as follows: Big Medium Small Sales 25,000 units @ $30 = $750,000
(this is 50% of company sales) 18,750 units @ $32 = $600,000 (this is 40% of company sales) 3,750 units @ $40 = $150,000 (this is 10% of company sales)
Variable Cost Per Unit $24 $24 $36 Traceable Fixed Costs (Advertising) $20,000 $10,000 $5,000 Allocated Companywide Fixed Costs $69,000 $55,200 $13,800 ($138,000 total allocated By sales 50%, 40%, 10%)
Prepare G Company's Segment Margin Income Statement with a column for each subunit, and a fourth column to "Total" for the entire company. (b) Then explain whether "Small" store should be closed or not. ( c) Then explain why or why not it should be closed AND what the relevant dollar amount change in total company income would be if it was closed.
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