Orion Corporation runs two stores, one in Medfield and one in Oakland. Operating income for each store in 2020 is as follows: 1 (Click the icon to view the operating income.) The equipment has zero disposal value. Read the requirements 2 Requirement 1. By closing down the Oakland store, Orion can reduce overall corporate overhead costs by $88,000. Should Orion Corporation close down the Oakland 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) Savings in Costs from Closing Oakland Store Revenues Operating costs Cost of goods sold Variable operating costs (labor, utilities) Lease rent (renewable each year) Depreciation of equipment Allocated corporate overhead Total operating costs Effect on operating income (loss) Should Orion close down the Oakland store? The loss of revenues is The cost savings is Which cost will not be saved because it is a past cost? Requirement 2. Instead of closing down the Oakland store, Orion Corporation is thinking of opening another store with revenues and costs identical to the Oakland store (including a cost of $42,000 to acquire equipment with a one-year useful life and zero disposal value) Opening this store will increase corporate overhead costs by $13,000. Should Orion Corporation open another store like the Oakland store? Explain. Begin by calculating Orion's operating income if it keeps the Oakland store open and opens another store with revenues and costs identical to the Oakland store. (If the net effect is an operating loss, enter the amount with parentheses or a minus sign.) Orion Corporation (3) open another store like the Oakland store because it yields a(n) (4) in operating income. 1: Data Table 2: Requirements 1. By closing down the Oakland store, Orion can reduce overall corporate overhead costs by $88,000. Should Orion Corporation close down the Oakland store? 2. Instead of closing down the Oakland store, Orion Corporation is thinking of opening another store with revenues and costs identical to the Oakland store (including a cost of $42,000 to acquire equipment with a 1-year useful life and zero disposal value). Opening this store will increase corporate overhead costs by $13,000. Should Orion Corporation open another store like the Oakland store? Explain (1) (2) lease rent costs (3) should not Yes allocated corporate overhead costs variable operating costs should No cost of goods sold equipment-related depreciation costs (4) decrease increase
