Sanchez C (Click The equip can increa Read the Requirem Island stor Begin by c an operati Revenues Operating Cost o Lease Labor Depre Utilities Corporate Total op Effect on ope Is Maria Lope Lopez is Data table Revenues Operating costs - X Cost of goods sold Lease rent (renewable each year) Labor costs (paid on an hourly basis) Depreciation of equipment Utilities (electricity, heating) Allocated corporate overhead Total operating costs Operating income (loss) Connecticut Store Rhode Island Store $ 1,120,000 $ 810,000 775,000 680,000 89,000 74,000 46,000 43,000 22,000 19,000 47,000 44,000 49,000 44,000 1,028,000 904,000 $ 92,000 $ (94,000) Requirements 1. By closing down the Rhode Island store, Sanchez can reduce overall corporate overhead costs by $51,000. Calculate Sanchez'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 Sanchez'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 $19,000 to acquire equipment with a one-year useful life and zero disposal value). Opening this store will increase corporate overhead costs by $8,000. Is Maria Lopez's statement about the effect of adding another store like the Rhode Island store correct? Explain. Print Done ore in 2014 is as follows: chez Corporation, makes the following comment, "Sa Calculate Sanchez's operating income if it closes the mount. Enter a "0" if the cost is not relevant. If the ne X the analysis above. Sanchez Corporation runs two convenience stores, one in Connecticut and one in Rhode Island. Operating income for each store in 2014 is as follows: (Click to view the operating income for the stores.) The equipment has a zero disposal value. In a senior management meeting, Maria Lopez, the management accountant at Sanchez Corporation, makes the following comment, "Sanchez can increase its profitability by closing down the Rhode Island store." Is Maria Lopez Correct? Read the requirements. Requirement 1. By closing down the Rhode Island store, Sanchez can reduce overall corporate overhead costs by $51,000. Calculate Sanchez'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 Sanchez's operating income if it closes the Rhode Island store. (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 Operating costs Cost of goods sold Lease rent (renewable each year) Labor costs (paid on an hourly basis) Depreciation of equipment Utilities (electricity, heating) Corporate overhead Total operating costs Effect on operating income (loss) Is Maria Lopez's statement about the effect of closing the Rhode Island store correct? Explain. Lopez is that Sanchez Corporation's operating income would increase if it closes down the Rhode Island store as shown by the analysis above. Sanchez C (Click The equip can increa Read the Requirem Island stor Begin by c an operati Revenues Operating Cost o Lease Labor Depre Utilities Corporate Total op Effect on ope Is Maria Lope Lopez is Data table Revenues Operating costs - X Cost of goods sold Lease rent (renewable each year) Labor costs (paid on an hourly basis) Depreciation of equipment Utilities (electricity, heating) Allocated corporate overhead Total operating costs Operating income (loss) Connecticut Store Rhode Island Store $ 1,120,000 $ 810,000 775,000 680,000 89,000 74,000 46,000 43,000 22,000 19,000 47,000 44,000 49,000 44,000 1,028,000 904,000 $ 92,000 $ (94,000) Requirements 1. By closing down the Rhode Island store, Sanchez can reduce overall corporate overhead costs by $51,000. Calculate Sanchez'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 Sanchez'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 $19,000 to acquire equipment with a one-year useful life and zero disposal value). Opening this store will increase corporate overhead costs by $8,000. Is Maria Lopez's statement about the effect of adding another store like the Rhode Island store correct? Explain. Print Done ore in 2014 is as follows: chez Corporation, makes the following comment, "Sa Calculate Sanchez's operating income if it closes the mount. Enter a "0" if the cost is not relevant. If the ne X the analysis above. Sanchez Corporation runs two convenience stores, one in Connecticut and one in Rhode Island. Operating income for each store in 2014 is as follows: (Click to view the operating income for the stores.) The equipment has a zero disposal value. In a senior management meeting, Maria Lopez, the management accountant at Sanchez Corporation, makes the following comment, "Sanchez can increase its profitability by closing down the Rhode Island store." Is Maria Lopez Correct? Read the requirements. Requirement 1. By closing down the Rhode Island store, Sanchez can reduce overall corporate overhead costs by $51,000. Calculate Sanchez'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 Sanchez's operating income if it closes the Rhode Island store. (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 Operating costs Cost of goods sold Lease rent (renewable each year) Labor costs (paid on an hourly basis) Depreciation of equipment Utilities (electricity, heating) Corporate overhead Total operating costs Effect on operating income (loss) Is Maria Lopez's statement about the effect of closing the Rhode Island store correct? Explain. Lopez is that Sanchez Corporation's operating income would increase if it closes down the Rhode Island store as shown by the analysis above