Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The Jones love to hang out at Tommy Bahama, a popular restaurant in Florida with four locations. The owners of Tommy Bahama recently evaluated
The Jones love to hang out at Tommy Bahama, a popular restaurant in Florida with four locations. The owners of Tommy Bahama recently evaluated the operating performances of the locations, as shown below. The owners are debating whether the one unprofitable location (Naples) should be eliminated. Sales The Other 3 Locations The Naples Location Total $3,325,652 $1,032,430 $4,358,082 Cost of Goods Sold 2.465.000 967.000 3.432.000 Gross Profit 860,652 65,430 926,082 Operating Expenses Net Income 418.000 76.992 494.992 $442,652 ($11,562) $431,090 Within the unprofitable location, cost of goods sold are 76% variable and 24% fixed and operating expenses are 12% variable and 88% fixed. If the unprofitable location is eliminated, 50% of all its fixed costs can be avoided. What is the change in total net income if the unprofitable location is eliminated?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started