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 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 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: Sales Cost of goods sold Gross margin Department manager's salary Sales commissions Rent on store lease Store utilities Net Income (loss) Hen's Department $710,000 (274,000) 436,000 (69,000) (123,200) (38,000) (21.000) $ 184,800 Women's Department $510.000 (183,200) 326,800 (58,000) (92.600) (38,000) (21,000 $ 117,200 Children's Department $ 210.000 (105,375) 104,625 (38,890) (36,400) (38.000 (21,000) 5 (28,775) Required o. 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 aby preparing income statements for the company 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 eamings by $49,000. 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 31 Required B2 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 profit (loss) Should the children's department be eliminated? Required B1 > CO ent on store lease core utilities et income (loss) (38,000) (21,000 $ 184,800 (38, Voo) (21,000 $ 117,200 (21,00 $ (28,775 quired a. Calculate the contribution margin. Determine whether to eliminate the children's 1. Calculate the net income for the company as a whole with the children's departm -2. Confirm the conclusion you reached in Requirement a by preparing income state department c. Eliminating the children's department would increase space available to display m estimates that a wider selection of adult boots would increase the store's net earr 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 net income for the company as a whole with the children's department. Net income (loss) UCPULCHIL. c. Eliminating the children's department would increase space available to display estimates that a wider selection of adult boots would increase the store's net ear 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 Confirm the conclusion you reached in Requirement a by preparing income statements fort department. Men's Women's Department Department Company Total Sales Cost of goods sold Gross margin Department manager's salary Sales commissions Rent on store lease Store utilities Net income (loss)
