Shown as follows is a segmented income statement for Drexel-Hall during the current month Profit Centers Drexel-Hall store 1 ore 3 Dollars $680,000 Dollars $600,000 Dollars $600,800 372,800 $228,000 $108,000 Dollars 100 % 198% 63 38% $ 37% $ 453 ear 100% 1,880,00060 $1,800,000 sales Variable costs contribution margirn Traceable fixed costs: controllable Performance nargitn Traceable fixed costs: committed 720,080 432,000 288,000 378,000 $222,000 102,800 330,90 $278,000 .ooe -$128,000 20,000$128 -20T 120,000 -- 27 210,000 .-10T . 18% 66,800 $(6,000) 180,80014,0008 8 66,80011 6% $60,000 10 s 54,809 9% (1)% store responsibility margin Conmon fixed costs Income fros operations $ 108,000 72,00 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 manegement 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 $60.000, and sales at Store 2 to increase by $120.000 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 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 $60.000, and sales at Store 2 to increase by $120,000 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 1and 2 c. The company's monthly income from operations Complete this question by entering your answers in the tabs below. Required A Required B RequiredC Total monthly sales for Drexel-Hall stores. RequiredB 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 BRequired C The monthly responsibility margin of Stores 1 and 2. Monthly Responsibility Margin Store 1 Store 2 K Required A Required C 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 The company's monthly income from operations. ed n monthly operating income Required B
