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The Boot Department at the Omaha Department Store is being considered for closure. The following information relates to boot activity: Sales revenue $ 372,000 Variable
The Boot Department at the Omaha Department Store is being considered for closure. The following information relates to boot activity:
Sales revenue | $ | 372,000 | |||
Variable costs: | |||||
Cost of goods sold | 299,000 | ||||
Sales commissions | 30,000 | ||||
Fixed operating costs | 91,000 | ||||
If 80% of the fixed operating costs are avoidable, should the Boot Department be closed?
Multiple Choice
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Yes, Omaha would be better off by $29,800.
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Yes, Omaha would be better off by $48,000.
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No, Omaha would be worse off by $24,800.
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No, Omaha would be worse off by $43,000.
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None of the answers is correct.
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