Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Ingrove Fresh Juice has three locations in Kamloops: Downtown, North Shore and Dufferin. Management is concemed about the performance of the downtown location, the rent
Ingrove Fresh Juice has three locations in Kamloops: Downtown, North Shore and Dufferin. Management is concemed about the performance of the downtown location, the rent is high and management is debating closing the store. A company-wide segmented income statement follows: Downtown North Shore Dufferin Total Sales $300,000 $350,000 $250,000 5900.000 Variable expenses 210.000 225.000 175.000 610.000 Contribution margin 90,000 125.000 75.000 290.000 Fixed expenses 150.000 75.000 40.000 265.000 Operating income (los) $(60.000) $50.000 $35.000 $25.000 An analysis of expenses reveals that if $40,000 of the downtown location's fixed expenses are allocated costs that would continue even if the store was closed. The North Shore and Dufferin locations could expect a 5% decrease in revenues due to lost promotional synergies closing the prominent downtown location. Required Compute the net dollar advantage or disadvantage of dropping the downtown location
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started