Shown as follows is a segmented income statement for Drexel-Hall during the current month: Profit Centers...
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Shown as follows is a segmented income statement for Drexel-Hall during the current month: Profit Centers Store 2 Drexel-Hall Dollars % Store 1 Dollars $ 1,800,000 100% $ 600,000 % 100% Dollars % Store 3 Dollars % $ 600,000 100% $ 600,000 100% 1,080,000 $ 720,000 432,000 60 372,000 62 40% $ 228,000 38% 24 120,000 $ 288,000 180,000 16% 10 $ 108,000 48,000 20 18% 378,000 $ 222,000 102,000 63 330,000 55 37% 17 8 $ 120,000 66,000 20% 11 $ 270,000 210,000 $ 60,000 66,000 45% 35 10% 11 $ 72,000 6% 2 4% $ 60,000 10% $ 54,000 9% $ (6,000) (1)% Sales Variable costs Contribution margin Traceable fixed costs: controllable Performance margin Traceable fixed costs: committed Store responsibility margin Common fixed costs $ 108,000 36,000 Income from operations es 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 $79,000, and sales at Store 2 to increase by $139,000. Closing Store 3 is not expected to cause any change in common fixed costs. Required: 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 Shown as follows is a segmented income statement for Drexel-Hall during the current month: Profit Centers Store 2 Drexel-Hall Dollars % Store 1 Dollars $ 1,800,000 100% $ 600,000 % 100% Dollars % Store 3 Dollars % $ 600,000 100% $ 600,000 100% 1,080,000 $ 720,000 432,000 60 372,000 62 40% $ 228,000 38% 24 120,000 $ 288,000 180,000 16% 10 $ 108,000 48,000 20 18% 378,000 $ 222,000 102,000 63 330,000 55 37% 17 8 $ 120,000 66,000 20% 11 $ 270,000 210,000 $ 60,000 66,000 45% 35 10% 11 $ 72,000 6% 2 4% $ 60,000 10% $ 54,000 9% $ (6,000) (1)% Sales Variable costs Contribution margin Traceable fixed costs: controllable Performance margin Traceable fixed costs: committed Store responsibility margin Common fixed costs $ 108,000 36,000 Income from operations es 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 $79,000, and sales at Store 2 to increase by $139,000. Closing Store 3 is not expected to cause any change in common fixed costs. Required: 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
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Financial and Managerial Accounting the basis for business decisions
ISBN: 978-1259692406
18th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello
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