MMV Incorporated opened a chain of businesses several years ago that provide quick oil changes and other minor services in conjunction with a convenience operation consisting of a soup, sandwich, and snack bar. The strategy was that as customers brought autos in for oil changes, they would likely use the convenience operation to purchase a sandwich, bowl of soup, beverage, or some other snack while they were waiting for the work to be completed on their autos. The oil change operation occupies $75\%$ of the facility and includes three service bays. The soup, sandwich, and snack bar occupies the remaining $25\%.$ A general manager is responsible for the entire operation, but each segment also has a manager responsible for its individual operation.

Recently, the following annual operating information for the soup, sandwich, and snack bar at one of MMV$$s locations caught the general manager$$s attention. Sales for the year were $$250,000,$ and cost of sales $($food$,$ beverages, and snack items$)$ are $50\%$ of sales revenue. Operating expense information for the convenience operation follows:

Food service items $($spoons$,$ napkins, etc.$)$ $ $3,600$

Utilities $7,200$

Wages for part$-$time employees $48,000$

Convenience operation manager$$s salary $60,000$

General manager$$s salary $18,000$

Advertising $20,000$

Insurance $12,000$

Property taxes $3,000$

Food equipment depreciation $5,000$

Building depreciation $15,000$

While investigating these operating expenses, MMV Incorporated determines the following:

Utilities are allocated to each segment based on square footage; however, $50\%$ of the amount allocated to the soup, sandwich, and snack bar results from operating the food equipment.

The general manager$$s salary is allocated between the segments based on estimated time spent with each operation. It is determined that $20\%$ of the general manager$$s time is spent with the convenience operation.

Advertising is allocated to each segment equally but could be reduced by $$3,000$ if MMV decided to advertise only the auto services.

Insurance is allocated to each segment based on square footage, but only $25\%$ of the amount allocated to the soup, sandwich, and snack bar results directly from its operation.

Property taxes and building depreciation are allocated to each segment based on square footage.

Required:

From the preceding information, calculate the operating income or loss from the soup, sandwich, and snack bar operation that has caught the general manager$$s attention.

Identify whether each of these operating expenses is relevant to the decision of discontinuing the soup, sandwich, and snack bar operation, if relevant, provide the relevant values.

If MMV discontinues the soup, sandwich, and snack bar operation, how much will operating income increase or decrease for this location?

Should MMV continue or discontinue the soup, sandwich, and snack bar operation at this location?MMV Incorporated opened a chain of businesses several years ago that provide qulck oll changes and other minor services in

conjunction wlth a convenlence operation consisting of a soup, sandwich, and snack bar. The strategy was that as customers brought

autos in for oll changes, they would likely use the convenlence operation to purchase a sandwich, bowl of soup, beverage, or some

other snack while they were walting for the work to be completed on their autos. The oll change operation occuples $75\%$ of the facility

and Includes three service bays. The soup, sandwich, and snack bar occuples the remaining $25\%.$ A general manager is responsible

for the entire operation, but each segment also has a manager responsible for Its Individual operation.

Recently, the following annual operating Information for the soup, sandwich, and snack bar at one of MMV$\text{'}$s locatlons caught the

general manager's attention. Sales for the year were $$250,000,$ and cost of sales $($food$,$ beverages, and snack items$)$ are $50\%$ of sales

revenue. Operating expense information for the convenlence operation follows:

While Investigating these operating expenses, MMV Incorporated determines the following:

Utilitles are allocated to each segment based on square footage; however, $50\%$ of the amount allocated to the soup, sandwich, and

snack bar results from operating the food equlpment.

The general manager's salary Is allocated between the segments based on estimated time spent with each operation. It is

determined that $20\%$ of the general manager's time is spent with the convenlence operation.

Advertising is allocated to each segment equally but could be reduced by $$3,000$ If MMV decided to advertise only the auto

services.

Insurance is allocated to each segment based on square footage, but only $25\%$ of the amount allocated to the soup, sandwich, and

snack bar results directly from Its operation.

Property taxes and bullding dep