The Shoe Department at Department Store is being considered for closure. The following information related to shoe department activity: Sales revenue $352,000 Variable costs: Cost of goods sold 282,000 Sales commissions 32,000 Fixed operating costs 92,000 If 80% of the fixed operating costs are avoidable, should the shoe department be closed?

No, Knights would be worse off by 38,000

Correct Answer

Yes, would be better off by $35,600

No, would be worse off by $19,600

Yes, would be better off by $54,000

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