Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please disregard the incorrect answers labeled by the red flag (they are from a previous attempt) and use the new provided data table above to

image text in transcribedimage text in transcribed

Please disregard the incorrect answers labeled by the red flag (they are from a previous attempt) and use the new provided data table above to fill in the correct answers, thankyou :)

(Click the icon to view the add-or-drop segments information.) Rivera 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.) Read the requirements Requirements Data table Connecticut Rhode Island Store Store $ 1.110,000 $ 830.000 Revenues Operating costs 1. By closing down the Rhode Island store, Rivera can reduce overall corporate overhead costs by $48,000. Calculate Rivera'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 Rivera'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 $23,000 to acquire equipment with a 1-year useful life and zero disposal value). Opening this store will increase corporate overhead costs by $5.000. Is Maria Lopez's statement about the effect of adding another store like the Rhode Island store correct? Explain. ? . 790,000 620,000 79,000 94,000 Cost of goods sold Lease rent (renewable each year) Labor costs (paid on an hourly ( basis) 49,000 37,000 24,000 23,000 Print Done Depreciation of equipment Utilities (electricity, heating) , Allocated corporate overhead 48,000 50.000 39.000 47,000 1.050,000 848,000 Total operating costs $ 60,000 $ (18,000) Operating income (loss) Print Done Requirement 1. By closing down the Rhode Island store. Rivera can reduce overall corporate overhead costs by $48,000. Calculate Rivera'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 Rivera'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) Savings in Costs Revenues $ (830,000) Operating costs Cost of goods sold 820.000 Lease rent (renewable each year) 70.000 Labor costs (paid on an hourly basis) 37.000 Depreciation of equipment 0 Utilities (electricity, heating) 50,000 Corporate overhead 46.000 832.000 Total operating costs 2.000 Effect on operating income (loss) Is Maria Lopez's statement about the effect of closing the Rhode Island store correct? Explain. Lopez is correct that Rivera Corporation's operating income would increase if it closes down the Rhode Island store as shown by the analysis above. Note that by closing down the Rhode Island store Rivera Corporation will save none of the equipment-related (depreciation) costs because this is a past cost Requirement 2. Calculate Rivera'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 $23.000 to acquire equipment with a 1-year useful life and zero disposal value). Opening this store will increase corporate overhead costs by $5,000. Is Maria Lopez's statement about the effect of adding another store like the Rhode Island store correct? Begin by calculating Rivera'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 an operating loss, enter the amount with parentheses or a minus sign.) Incremental Revenues (Incremental Costs) $ 830,000 Revenues Operating costs Cost of goods sold Lease rent (renewable each year) Labor costs (paid on an hourly basis) (620,000) (70,000) ( (37,000) (23,000) (50,000) (5,000) Depreciation of equipment Utilities (electricity, heating) Corporate overhead Total operating costs (814,000) $ 16.000 Effect on operating income (loss) Is Maria Lopez's statement about the effect of adding another store like the Rhode Island store correct

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting Cases

Authors: Camillo Lento, Jo-Anne Ryan

3rd Canadian Edition

1119594642, 978-1119594642

More Books

Students also viewed these Accounting questions