Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Lux Company operates two stores with the following information. Store A Store B Total Sales revenue 150,000 90,000 240,000 Variable Costs 90,000 54,000 144,000 Fixed
Lux Company operates two stores with the following information.
Store A | Store B | Total | ||||
Sales revenue | 150,000 | 90,000 | 240,000 | |||
Variable Costs | 90,000 | 54,000 | 144,000 | |||
Fixed Costs (Allocated) | 40,000 | 40,000 | 80,000 | |||
Income (Loss) | 20,000 | (4,000) | 16,000 |
If Store B is closed, sales at Store A will increase by $30,000 and 75% of the fixed costs allocated to Store B can be avoided.
What is the increase or decrease in the company's net income if Store B is closed? If it is a decrease use a negative sign.
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