Thornton Boat Co. sells men's, women's, and children's boots. For each type of boot sold, it operates a separate department that has Its own manager. The manager of the men's department has a sales staff of nine employees, the manager of the women's department has slx employees, and the manager of the children's department has three employees. All departments are housed in a single store. In recent years, the children's department has operated at a net loss and is expected to continue to do so. Last year's income statements follow. Men's Children' Departnent s 200,000 (104,875) Women's Department S 500,000 (182,800) 317,200 (57,000) (91,600) (37,000) (20,000) Department $ 700,000 Sales Cost of goods sold (273,500) 426,500 (68,000) Gross margin Department manager's salary Sales comminaions 95,125 (37,000) (35,900) (37,000) (122,200) (37,000) (20,000) Rent on store lease Store utilities (20,000) S (34.775) Net incone (loss) $ 179,300 S 111,600 Required a. Calculate the contribution to profit. Determine whether to eliminate the children's department b-1. Calculate the net income for the company as a whole with the children's department b-2. Confirm the conclusion you reached in Requirement a by preparing income statements for the company as a whole with and without the children's department c. Eliminating the children's department would increase space available to display men's and women's boots. Suppose management estimates that a wider selection of adult boots would increase the store's net earnings by $48,000. Would this information affect the decision that you made in Requirement a? Complete this question by entering your answers in the tabs below. Required A Required B1 Required B2 Required C Calculate the contribution to profit. Determine whether to eliminate the children's department Complete this question by entering your answers in the tabs below. Required B1 Required A Required B2 Required C Calculate the contribution to profit. Determine whether to eliminate the children's department. Contribution to profit (loss) Should the children's department be eliminated? Required B1 Required A Complete this question by entering your answers in the tabs below. Required A Required B1 Required B2 Required C Calculate the net income for the company as a whole with the children's department. Net income (loss) Required A Required B2 Complete this question by entering your answers in the tabs below. Required A Required B1 Required B2 Required C Confirm the conclusion you reached in Requirement a by preparing income statements for the company as a whole with and without the children's department. Men's Women's Company Total Department Department Sales 0 Cost of goods sold 0 Gross margin 0 0 Department manager's salary Sales commissions 0 Rent on store lease 0 Store utilities 0 0S Net income (loss) Required C Required B1 Complete this question by entering your answers in the tabs below. Required A Required B1 Required 82 Required C Eliminating the.children's department would increase space available to display men's and women's boots. Suppose management estimates that a wider selection of adult boots would increase the store's net earnings by $48,000. Would this information affect the decision that you made in Requirement a? Will the decision made in Requirement a be affected? Required C Required 82
