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Martinez Corporation runs two convenience stores, one in Connecticut and one in Rhode Island. Operating income for each store in 2020 is as follows:
Martinez Corporation runs two convenience stores, one in Connecticut and one in Rhode Island. Operating income for each store in 2020 is as follows: (Click to view the operating income for the stores.) i (Click the icon to view the add-or-drop segments information.) Read the requirements. Requirement 1. By closing down the Rhode Island store, Martinez can reduce overall corporate overhead costs by $41,000. Calculate Martinez's operating income if it closes the Rhode Island store. Is Maria Lopez's statement about the effect of closing the Rhode Island store correct? Explain. Begin by calculating Martinez's operating income if it closes the Rhode Island store. (Complete all input fields. Enter losses in revenues as a negative amount. Enter a "0" if the cost is not relevant. If the net effect is an operating loss enter the amount with parentheses or a minus sign.) (Loss in Revenues) Revenues Operating costs Cost of goods sold Lease rent (renewable each year) Savings in Costs Labor costs (paid on an hourly basis) Depreciation of equipment Utilities (electricity, heating) Corporate overhead Total operating costs Effect on operating income (loss) Is Maria Lopez's statement about the effect of closing the Rhode Island store corred Lopez is that Martinez Corporation's operating income would increase Requirements 1. By closing down the Rhode Island store, Martinez can reduce overall corporate overhead costs by $41,000. Calculate Martinez's operating income if it closes the Rhode Island store. Is Maria Lopez's statement about the effect of closing the Rhode Island store correct? Explain. 2. Calculate Martinez's operating income if it keeps the Rhode Island store open and opens another store with revenues and costs identical to the Rhode Island store (including a cost of $25,000 to acquire equipment with a 1-year useful life and zero disposal value). Opening this store will increase corporate overhead costs by $4,000. Is Maria Lopez's statement about the effect of adding another store like the Rhode Island store correct? Explain. Print Done Data table past cost. Requirement 2. Calculate Martinez's operating income if it keeps the Rhode Island store open and opens another store with revenues and costs identical to the Rhode Island store (including a cost of $25,00 corporate overhead costs by $4,000. Is Maria Lopez's statement about the effect of adding another store like the Rhode Island store correct? Begin by calculating Martinez's operating income if it keeps the Rhode Island store open and opens another store with revenues and costs identical to the Rhode Island store. (If the net effect is an operating Revenues Operating costs Incremental Revenues (Incremental Costs) Connecticut Rhode Island Store Store 1,070,000 $ 820,000 Revenues Operating costs Cost of goods sold 700,000 630,000 Lease rent (renewable each year) 86,000 73,000 Labor costs (paid on an hourly basis) 42,000 46,000 Depreciation of equipment 22,000 25,000 Utilities (electricity, heating) 41,000 52,000 49,000 37,000 Allocated corporate overhead 940,000 863,000 Total operating costs Operating income (loss) 130,000 $ (43,000) Print Done e
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