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The most recent monthly income statement for Townshend Stores is given below: Total Store A Store B Sales $1,040,000 $440,000 $600,000 Variable expenses 590,000 180,000
The most recent monthly income statement for Townshend Stores is given below: Total Store A Store B Sales $1,040,000 $440,000 $600,000 Variable expenses 590,000 180,000 410,000 Contribution margin 450,000 260,000 190,000 Traceable fixed expenses 300,000 120,000 180,000 Store segment margin 150,000 140,000 10,000 Common fixed expenses 50,000 20,000 30,000 Net operating income $100,000 $120,000 ($20,000) Due to its poor showing, consideration is being given to closing Store B. Studies show that if Store B is closed, one-fourth of its traceable fixed expenses will continue unchanged. The studies also show that closing Store B would result in a 10 percent decrease in sales in Store A. The company allocates common fixed expenses to the stores on the basis of sales dollars. Required: 10 points Determine the monthly financial advantage (disadvantage) of closing Store B using the income statement format above and then stating the difference
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