Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

THIS QUIBB6K! 14 points) possible Rivera Corporation runs two convenience stores, one in Connecticut and one in Rhode Island Operating income for each store

image text in transcribedimage text in transcribedimage text in transcribed

THIS QUIBB6K! 14 points) possible Rivera Corporation runs two convenience stores, one in Connecticut and one in Rhode Island Operating income for each store in 2014 is as follows (Click to view the operating income for the stores) Submit test The equipment has a zero disposal value. In a senior management meeting, Maria Lopez, the management accountant at Rivera Corporation, makes the following comment "Rivera can increase its profitability by cloung down the Rhode Island store. "Is Mana Lopez Correct? Read the rearements Requirement 1. By closing down the Rhode Island store, Rivera can reduce overall corporate overhead costs by $47,000 Calculate Rivera's operating income if it closes the Rhode Island store. Is Maria Lopez's statement about the effect of closing the Rhode Island store correct? Explain Begin by calculating Rivera's operating income if it closes the Rhode Island store (Enter losses in revenuesas Enter the tectisanation loss.co.thea with parentheses or a minus sign) (Loss in Revenues) Savings in Costs Data table Revenues Operating costs Cost of goods sold 900000 Connecticut Store Rhode Island Store 1.040.000 $ 900.000 700000 Revenues Lease rent renewable each year) 79000 Operating costs Labor costs (paid on an hourly basin) 42000 Cost of goods sold 760,000 700,000 Depreciation of equipment Lease rend (renewable each year) 95,000 79000 Uities (electricity, heating) Corporate overhead 50000 Labor costs (paid on an hourly basis) 45000 42,000 45000 Depreciation of equipment 24,000 23.000 Total operating costs Effect on operating income) 916000 Les (electricity, heating) - 47,000 50,000 50,000 45,000 Alocaled corporate overhead 10000 1,022,000 Toperating costs 909.000 Is Maria Loper's statement about the effect of closing the Rhode Island store corect? Explan Lopez i conect that Rivera Corporation's operating income would increase if it closes down the Fo $ 10,000 $ (39,000) Operating income dosa) Print Done Time Remaining orang

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles of Financial Accounting

Authors: Belverd E. Needles, Marian Powers

12th edition

978-1133940562, 1133940560, 978-1285608464, 1285608461, 1133939287, 978-0357693605, 978-1285607047, 128560704X, 978-1133939283

More Books

Students also viewed these Accounting questions

Question

How flying airoplane?

Answered: 1 week ago

Question

What does non-recourse financing mean?

Answered: 1 week ago