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please provide excel working notes Sophisticates' Corner sells clothing, shoes, and accessories at a suburban location near Boston. Information for the just concluded calendar year
please provide excel working notes
Sophisticates' Corner sells clothing, shoes, and accessories at a suburban location near Boston. Information for the just concluded calendar year follows. Clothing Shoes Accessories Sales $850,000 $320,000 $150,000 Less: Variable costs $510,000 $270,000 $ 82,500 Fixed costs 290,000 70,000 42,000 Total costs $800,000 $340,000 $124,500 Operating income (loss) $ 50,000 $ (20,000) $ 25,500 Table Management is considering closing the shoe operation because of the loss and expanding the space that is currently devoted to accessories sales. A salaried salesperson in the shoe department who earns $45,000 will be terminated; however, all other departmental fixed costs will continue to be incurred. Sophisticates' Corner will spend $16,000 on remodeling costs and anticipates that accessories sales will increase by $70,000. This additional sales revenue is expected to generate a 35% contribution margin for the firm. Finally, because clothing customers often purchased shoes and feel strongly about "one-stop shopping," clothing sales are expected to fall by 10% if the shoe department is closed. Recalculate the total Sophisticates' Corner income statement assuming Shoes are eliminated. Should Shoes be discontinuedStep by Step Solution
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