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Show Work Thornton Boot Co. sells men's, women's, and children's boots. For each type of boot sold, it operates a separate department that has its
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Thornton Boot Co. sells men's, women's, and children's boots. For each type of boot sold, it operates a separate department that has its own manager. The manager of the men's department has a sales staff of nine employees, the manager of the women's department has six employees, and the manager of the children's department has three employees. All departments are housed in a single store In recent years, the children's department has operated at a net loss and is expected to continue to do so. Last year's income statements follow: Men' s Department Women's Department Children's Department Sales Cost of goods sold Gross marqin Department manager 's salary Sales commissions Rent on store lease Store utilities $700,000 $500,000 $200,000 (273,500) 426,500 (68,000) (122,200) (37,000) (20,000) (182,800) 317,200 (57,000) (91,600) (37,000) (104,875) 95,125 (37,000) (35,900) (37,000) 20,000) 20,000) Net income (loss) $179,300 $111,600 (34,775 Required a. Calculate the contribution margin. Determine whether to eliminate the children's department. b-1. Calculate the net income for the company as a whole with the children's department. b-2. Confirm the conclusion you reached in Requirement a by preparing income statements for the company as a whole with and without the children's department. c. Eliminating the children's department would increase space available to display men's and women's boots. Suppose management estimates that a wider selection of adult boots would increase the store's net earnings by $48,000. Would this information affect the decision that you made in Requirement aStep by Step Solution
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