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I need help with question 2 and the monthly responsibility margin. I have the other answers correct. Store 3 100 % Sales Variable costs Contribution
I need help with question 2 and the monthly responsibility margin. I have the other answers correct.
Store 3 100 % Sales Variable costs Contribution margin Traceable fixed costs: controllable Performance margin Traceable fixed costs: committed Store responsibility margin Common fixed costs Income from operations Drexel-Hall Dollars $1,800,000 1,080,000 $ 720,000 432,000 $ 288,000 180,000 $ 108,000 36,000 $ 72,000 Store 1 Dollars $600,000 372,000 $ 228,000 120,000 $108,000 48,000 $ 60,000 Profit Centers Store 2 Dollars $600,000 100% 378,000 $ 222,000 102,000 $120,000 66,000 $ 54,000 Dollars $600,000 330,000 $ 270,000 210,000 $ 60,000 66,000 $ 6,000) (1) 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. Compute the increase or decrease that closing Store 3 should cause in: a. Total monthly sales for Drexel-Hall stores. b. The monthly responsibility margin of Stores 1 and 2. c. The company's monthly income from operations. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required A Required B Required C 1 and 2. The monthly responsibility margin of Stores 1 and 2. Store Monthly Responsibility Margin 82,800 9 8,400 Net increase Net increase Store SStep by Step Solution
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