Question
Please provide a proper calculations and the explanation for the question. Thank you Northern Stores is a retailer in British Columbia. The most recent monthly
Please provide a proper calculations and the explanation for the question. Thank you
Northern Stores is a retailer in British Columbia. The most recent monthly statements are below. Northern is considering closing Store I. If it is closed one quarter of its traceable fixed expenses would continue to be incurred. Also the closing of Store I would result in a 20% decrease in sales in Store II.Northern allocated common fixed expenses on the basis of sales dollars, none of which would be saved it a store shuts down.
Northern Stores | |||
Total | Store I | Store II | |
Sales | $ 2,100,000 | $ 1,300,000 | $ 800,000 |
Variable Expenses | 1,260,000 | 882,000 | 378,000 |
Contribution Margin | 840,000 | 418,000 | 422,000 |
Traceable Fixed expenses | 420,000 | 231,000 | 189,000 |
Common expenses allocated | 350,000 | 210,000 | 140,000 |
Operating Income/Loss | $ 70,000 | $ (23,000) | $ 93,000 |
Required:
Recommend which store, if any, should be eliminated. show a report in good form to support your answer.
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