Vernon Boot Co. sells men's, women's, and children's boots. For each type of boot sold, it operates a separate department that has own manager. The manager of the men's department has a sales staff of nine employees, the manager of the women's department has six 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 Children's Department Konen a Department $ 510,000 Department 710,000 5 210,000 Salea cost of soods sold Gross margin Departnent manager's alary Sales conniesiors Rent on store lease Stere utilities Net incone (los8) 436,000 (69,000) (123,200) (38,000) (21,000) 184,800 326,800 (38,000) (92,600) (38,000) (21,000) 117,200 104,625 (38,000) (36,400) (38,000) (21,000) $(28,775) Required a. Calculate the contribution margin. 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 o by preparing income statements for the company without the children's department c. Elliminating the children's department would Increase space avallable 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 $49,000. Would this information affect the decision that you made in Requirement a? Complete thls question by entering your answers In the tabs below. Required A Required 81 Required 82 Required C Calculate the contribution margin. Determine whether to eliminate the children's department. (Negative amounts should be indicated by a minus sign.) Contribution to profd (oss) Should the children's department be elminated?No Complete this question by entering your answers in the tabs below. Required A Required B1 Required 02 Required C Cakculate the net income for the company as a whote with the chidren's department. Net income (oss) & Answer is not complete. Complete this questlon by entering your answers In the tabs below. Required A| Required B1 Required 82 Required c Confirm the conclusion you reached in Requirement a by preparing income statements for the company without the children's department Men's Department Department | Total Women'sCompany 710.000 510,000 1.220.000 Sa'es Cost of goods sold Gross margn Department manager's salbry Sales commissions Rent on store lease Siore ublities 214.000 183.200 457.200 762.800 36,000326,800 | 69.000 e ..se.oooO|127,000 123,20092.600215.800 243,800 176.200 420.000 Complete this question by entering your answers in the tabs below Required A Required 81 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 increasethe store's net earnings by $49,000. Would this information affect the decision that you made in Requirement a? C Required B2
