Needing help with C1.

Ridley and Scott Mercantile operates two stores, one on Maple Avenue and the other on Fenner Road. Results for the month of May, which is representative of all months, are as follows: Maple Avenue Fenner Road Store Store Total Sales revenue $80,000 $120,000 $200,000 Variable expenses 32,000 80,000 112,000 Contribution margin 48,000 40,000 88,000 Direct fixed expenses 20,000 35,000 55,000 Common fixed expenses 8,000 12,000 20,000 Total fixed expenses 28,000 47,000 75,000 Operating income $20,000 $(7,000) $13,000 The following information pertains to Ridley and Scott's operations. Forty percent of each store's direct fixed expenses would continue if either store were closed. . Ridley and Scott allocates common fixed expenses to each store on the basis of sales dollars. Management estimates that closing the Fenner Road store would result in a 15% decrease in the Maple Avenue store's sales, while closing the Maple Avenue store would have no effect on the Fenner Road store's sales. (a1) Your Answer Correct Answer (Used) Calculate the operating income if the Fenner Road store is closed. Operating income $ 6,800(b2) Your answer is correct. Should management consider closing the Maple Avenue store rather than the Fenner Road store? No eTextbook and Media Attempts: 2 of 3 used Using multiple attempts will impact your score. 20% score reduction after attempt 2 (c1) Instead of closing the Fenner Store, Ridley and Scott are considering a special promotional campaign at the Fenner Road store. They expect a $8,000 monthly increase in advertising expenses to generate a 15% increase in the store's sales volume. The campaign would not affect sales at the Maple Avenue store. What effect would the promotion have on Ridley and Scott's monthly income? (Round answer to O decimal places, e.g. 5,285.) in operating income $(a2) V Your answer is correct. Management believes that the Fenner Road store should be closed, since it is operating at a loss. Do you support management's belief? No e Textbook and Media Attempts: 2 of 3 used Using multiple attempts will impact your score. 20% score reduction after attempt 2 (b1) Your answer is correct. Calculate the segment margin for the Maple Avenue Store using the original data where both locations are operational. Segment margin $ 28000