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Shown as follows is a segmented income statement for Drexel-Hall during the current month. Sales Variable costs Contribution margin Traceable fixed costs: controllable Performance
Shown as follows is a segmented income statement for Drexel-Hall during the current month. Sales Variable costs Contribution margin Traceable fixed costs: controllable Performance margin Traceable fixed costs: committed Store responsibility margin. Common fixed costs Income from operations. Profit Centers Drexel-Hall Store 1 Store 2 Store 3. Dollars. Dollars) Dollars Dollars $1,800,000 100% $600,000 100% $600,000 100% 1,080,000 60 372,000 62 378,000 63 $600,000 330,000 100 55 $ 720,000 40% $228,000 38% $222,000 37% $270,000 45 N 432,000 $288,000 180,000 24 120,000 20 102,000 17 16% $108,000 18% 10 $ 108,000 6% 48,000 $60,000 8 $120,000 66,000 20% 210,000 $ 60,000 35 10 N 11 66,000 11 10% $ 54,000 9% $ (6,000) (1) % 36,000 2 $ 72,000 4% All stores are similar in size, carry similar products, and operate in similar neighborhoods. Store 1 was established first and was built at a lower cost than were Stores 2 and 3. This lower cost results in less depreciation expense for Store 1. Store 2 follows a policy of minimizing both costs and sales prices. Store 3 follows a policy of providing extensive customer service and charges slightly higher prices than the other two stores. Top management of Drexel-Hall is considering closing Store 3. The three stores are close enough together that management estimates closing Store 3 would cause sales at Store 1 to increase by $48,000, and sales at Store 2 to increase by $109,000. Closing Store 3 is not expected to cause any change in common fixed costs. Compute the increase or decrease that closing Store 3 should cause in: a. Total monthly sales for Drexel-Hall stores. b. The monthly responsibility margin of Stores 1 and 2. c. The company's monthly income from operations. Complete this question by entering your answers in the tabs below. Required A Required B Required C Total monthly sales for Drexel-Hall stores. expected in total monthly sales Net decrease Requ Required B>
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