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Orion Corporation runs two stores, one in Medfield and one in Oakland. Operating income for each store in 2017 is as follows (Click the icon
Orion Corporation runs two stores, one in Medfield and one in Oakland. Operating income for each store in 2017 is as follows (Click the icon to view the operating income.) The equipment has zero disposal value Read the requirements Requirement 1. By closing down the Oakland store, Orion can reduce overall corporate overhead costs by $88,000. Should Orion Corporation close down the Oakland store? (Complete all answer boxes. Enter losses in revenues as a negative amount. Enter a "0" if the cost is not relevant. If the net effect is an operating loss enter the amount with parentheses or a minus sign.) (Loss in Revenues) Savings in Costs from Closing Oakland Store O Data Table Revenues Operating costs Cost of goods sold Variable operating costs (labor, utilities) Lease rent (renewable each year) Depreciation of equipment Allocated corporate overhead Medfield Store Oakland Store 2,550,000 1,650,000 Revenues Operating costs Cost of goods sold Variable operating costs (labor, utilities) Lease rent (renewable each year) Depreciation of equipment Allocated corporate overhead 1,300,000 170,000 138,000 46,000 84,000 1,738,000 1,280,000 125,000 162,000 40,500 79,000 1,686,500 (36,500) Total operating costs Effect on operating income (loss) Requirements Total operating costs 812,000$ Operating income (loss) By closing down the Oakland store, Orion can reduce overall corporate overhead costs by $88,000. Should Orion Corporation close down the Oakland store? Print Done 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 $50,000 to acquire equipment with a one-year useful life and zero disposal value). Opening this store will increase corporate overhead costs by $14,000. Should Orion Corporation open another store like the Oakland store? Explain Print Done
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