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The most recent monthly income statement for Simply Cottage, a retailer in Nova Scotia is given below: Sales Less variable expense Contribution margin Less traceable
The most recent monthly income statement for Simply Cottage, a retailer in Nova Scotia is given below: Sales Less variable expense Contribution margin Less traceable fixed expense Segment margin Less common fixed expense Operating Income Total Store Al $2,100,000 $1,300,000 1,260,000 $882, 000 $840,000 $418,000 420,000 231, 000 $420,000 $187,000 350,000 210,000 $70,000 $23,000 Store BI $800,000 378,000 $422,000 189,000 $233, 000 140,000 $93, 000 Simply is considering closing Store A. If Store A is closed, one-fourth of its traceable fixed expenses would continue to be incurred. Also, the closing of Store A would result in a 20% decrease in sales in Store B. Simply allocates common fixed expenses on the basis of sales dollars and none of these costs would be saved if a store were shut down. Required: Compute the overall increase or decrease in the operating income of Simply Cottage if Store A is closed
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