Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

TI11-4 (similar to) Question Help Orion Corporation runs two stores, one in Medfield and one in Oakland. Operating income for each store in 2017 is

image text in transcribed

TI11-4 (similar to) Question Help Orion Corporation runs two stores, one in Medfield and one in Oakland. Operating income for each store in 2017 is as follows EE (Click the icon to view the operating income.) The equipment has zero disposal value Read the reguirements Requirement 1. By closing down the Oakland store, Orion can reduce overall corporate overhead costs by $88,000. Should Orion Corporation close down the Oakland store? (Complete all answer boxes. Enter losses in revenues as a negative amount. Enter a "O" if the cost is not relevant. If the net effect is an operating loss enter the amount with parentheses or a minus sign.) (Loss in Revenues) Savings in Costs from Closing Oakland Store Requirements 1. By closing down the Oakland store, Orion can reduce overall corporate overhead costs by $88,000. Should Orion Corporation close down the Oakland store? Revenues Operating costs 2. Cost of goods sold Variable operating costs (labor, utilities) Lease rent (renewable each year) Depreciation of equipment Allocated corporate overhead Instead of closing down the Oakland store, Orion Corporation is thinking of opening another store with revenues and costs identical to the Oakland store (including a cost of S50,000 to acquire equipment with a one-year useful life and zero disposal value). Opening this store will increase corporate overhead costs by $14,000. Should Orion Corporation open another store like the Oakland store? Explain PrintDone Total operating costs Effect on operating income (loss) Data Table Medfield Store Oakland Store Revenues 2,550,000$ 1,650,000 Operating costs Cost of goods sold Variable operating costs (labor, utilities) Lease rent (renewable each year) Depreciation of equipment Allocated corporate overhead 1,300,000 170,000 138,000 46,000 84,000 1,738,000 1,280,000 125,000 162,000 40,500 79,000 1,686,500 (36,500) Total operating costs 812,000 $ Operating income (loss) Print Done

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

Practical Auditing Techniques For ISO/TS 16949

Authors: Raymond Ness

1st Edition

978-0595273126

More Books

Students also viewed these Accounting questions

Question

What is the orientation toward time?

Answered: 1 week ago

Question

4. How is culture a contested site?

Answered: 1 week ago