B&B, a retailer, has two departments: beds and linens. A recent monthly income statement for the company follows:SalesLess: Variable expensesContribution marginLess: Fixed expensesNet operating income (loss)DepartmentNet operating income decreasedBedsLinens$3,000,000 $1,000,0001000,000by400,000600,000800,000$ 600,000 $ (200,000)2,000,0001,400,000Total$4,000,0001,400,000A study indicates that $240,000 of the fixed expenses being charged to linens are sunk costs or allocated costs that will continueeven if the linens department is dropped. In addition, the elimination of the linens department will result in a 20% decrease in the salesof the beds department.2,600,0002,200,000400,000Required:If the linens department is dropped, what will be the effect on the net operating income of the company as a whole?

Sunk costs refer to expenditures that have already been incurred and cannot be recovered. These…

Answered: B&B, a retailer, has two departments:…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses as shown by its most recent monthly contribution format income statement: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) $ 1,591, 000 706, 760 884, 240 973,000 $ (88,760) In an effort to resolve the problem, the company wants to prepare an income statement segmented by division. Accordingly, the Accounting Department provided the following information: Sales Variable expenses as a percentage of sales Traceable fixed expenses East $ 351,000 $262,000 56% Division Central $ 660,000 36% $ 335,000 West $ 580,000 47% $206,000 Required: 1. Prepare a contribution format income statement segmented by divisions. 2-a. The Marketing Department believes increasing the West Division's monthly advertising by $25,000 will increase that division's sales by 18%. Assuming these estimates are accurate, how much would the company's net operating income increase (decrease)…
Following is the revenue and cost data for Metlock Ltd. in the manufacturing of luxury shower curtains for the year ended December 31, 2022: NewsVariable manufacturing costs $34 per curtainVariable selling and administrative expenses $8 per curtain Fixed manufacturing overhead $53,900Fixed selling and administrative expenses $184,800 Units produced and sold 7, 700Selling price $84 per curtain. Prepare an income statement using absorption costing. Prepare an income statement using variable costing.
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Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Total Department Hardware Linens Sales $4,200,000 $3,090,000 $1,110,000 Variable expenses 1,240,000 840,000 400,000 Contribution margin 2,960,000 2,250,000 710,000 Fixed expenses 2,300,000 1,470, 000 830,000 Net operating income (loss) $ 660,000 $ 780,000 $ (120,000) A study indicates that $379,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 11% decrease in the sales of the Hardware Department. Required: What is the financial advantage ( disadvantage) of discontinuing the Linens Department?
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Wingate Company, a wholesale distributor of electronic equipment, has been experiencing losses for some time, as shown by its most recent monthly contribution format Income statement: sales variable expenses Contribution margin Fixed expenses $ 1,610,000 551,400 Net operating income (loss) 1,058,600 1,164,000 $ (105,400) In an effort to resolve the problem, the company would like to prepare an income statement segmented by division. Accordingly, the Accounting Department has developed the following Information: Sales East $410,000 Division Central $ 670,000 West $530,000 Variable expenses as a percentage of sales Traceable fixed expenses 52% 22% 36% $ 278,000 $ 326,000 $ 200,000 Required: 1. Prepare a contribution format Income statement segmented by divisions. 2-8. The Marketing Department has proposed increasing the West Division's monthly advertising by $27,000 based on the belief that it would increase that division's sales by 13%. Assuming these estimates are accurate, how much…
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solve this Question as per fast to posible
has a shoes and a shirts division. The company reported the following segmented Income statement for last month: Sales Variable expenses Contribution Margin Fixed Expenses Net operating Income (loss) Multiple Choice O O O Division Shoes Shirts $4,200,000 $3,000,000 $1,200,000 2.000.000 1.500.000 1,500,000 1.300.000 200,000 O The company predicts that $200,000 of the fixed expenses being charged to the Shirts Division are allocated costs that will continue even if the Shirts Division is eliminated. The elimination of the Shirts Division will additionally cause a 20% drop in Shoes Division sales. If the company shuts down its Shirts Division, by how much will the company's overall net operating income change? 2,200,000 2.200.000 Increase by $240,000 Decrease by $300,000 Total Decrease by $330,000 Increase by $330,000 0 500.000 700,000 900.000 (200,000)

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