Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution formatincome statement follows:SalesVariable expensesFixed expensesContribution marginNet operating income (loss)1,307,000DepartmentTotal$ 4,210,000Hardware$ 3,040,000Linens$ 1,170,000403,000767,000840,000$ (73,000)2,903,0002,290,000$ 613,000904,0002,136,0001,450,000$ 686,000A study indicates that $379,000 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 15% decrease in thesales of the Hardware Department.Required:What is the financial advantage (disadvantage) of discontinuing the Linens Department?Financial (disadvantage)

Discontinued operation is the decision making where the company decides to let go one of its…

Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Total $ 4,210,000 1,307,000 2,903,000 2,290,000 $ 613,000 Department Hardware $ 3,040,000 Linens $ 1,170,000 403,000 767,000 840,000 904,000 2,136,000 1,450,000 $ 686,000 $ (73,000) 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 15% decrease in the sales of the Hardware Department. Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? Financial (disadvantage)

Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Total $ 4,210,000 1,307,000 2,903,000 2,290,000 $ 613,000 Department Hardware $ 3,040,000 Linens $ 1,170,000 403,000 767,000 840,000 904,000 2,136,000 1,450,000 $ 686,000 $ (73,000) 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 15% decrease in the sales of the Hardware Department. Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? Financial (disadvantage)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

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 $ 4,070,000 $ 3,000,000 $ 1,070,000 Variable expenses 1,350,000 950,000 400,000 Contribution margin 2,720,000 2,050,000 670,000 Fixed expenses 2,320,000 1,470,000 850,000 Net operating income (loss) $ 400,000 $ 580,000 $ (180,000) A study indicates $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 20% decrease in the sales of the Hardware Department. Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? Note* The answer is not $23,900
Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Total $ 4,130,000 1,358,000 2,772,000 2,200,000 $ 572,000 Department Hardware $ 3,070,000 956,000 2,114,000 1,320,000 $ 794,000 Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? Linens $ 1,060,000 402,000 658,000 880,000 $ (222,000) 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 19% decrease in the sales of the Hardware Department.
Corbel Corporation has two divisions: Division A and Division B. Last month, the company reported a contribution margin of $43,800 for Division A Division B had a contribution margin ratio of 40% and its sales were $297,000. Net operating income for the company was $34,500 and traceable fixed expenses were $57,800. Corbel Corporation's common fixed expenses were: Multiple Choice $162,600 $128,100 $70,300 $57,800 4
Hancock Company manufactures and sells two lines of furniture, case goods and upholstery. During the most recent accounting period, the Case Goods and Upholstery Divisions sold 15,600 and 2,090 units, respectively. The company's most recent financial statements are shown below: (Do not round intermediate calculations.) Case Goods Upholstery Sales $1,663,000 $418,000 Less cost of goods sold: Unit-level production cost 1,039,000 250,800 Depreciation, production equipment Gross margin 249,000 62,700 $ 375,000 $104,500 Less operating expenses: Unit-level selling and administrative costs 62,400 52,250 Corporate-level facility expenses (fixed) 55,000 55,000 Net income (loss) $ 257,600 $ (2,750) If unit sales for both divisions increased 10%, the company would report which of the following? Multiple Choice A $55,000 increase in net income for the Upholstery Division A 10% increase in total net income of the company A decline in profit for the Upholstery Division A net income for the…
Delisa Corporation has two divisions: Division L and Division Q. Data from the most recent month appear below: Total Company Division L Division Q Sales $490,000 $125,000 $365,000 Variable expenses 288,800 62,500 226,300 Contribution margin 201,200 62,500 138,700 Traceable fixed expenses 111,650 34,790 76,860 Segment margin 89,550 $ 27,710 $ 61,840 Common fixed expenses 36,910 Net operating income $ 52,640 The break-even in sales dollars for Division Q is closest to:
Contribution margin and contribution margin ratio For a recent year, McDonald’s (MCD) company-owned restaurants had the following sales and expenses (in millions): Line Item Description Amount Sales $21,000 Food and paper $(2,500) Payroll and employee benefits (2,200) Occupancy and other expenses (4,100) General, selling, and administrative expenses (4,200) Total $(13,000) Operating income $8,000 Assume that the variable costs consist of food and paper, payroll, 25% of occupancy and other expenses, and 40% of the general, selling, and administrative expenses. a. What is McDonald's contribution margin?fill in the blank 1 of 1$ million b. What is McDonald's contribution margin ratio? Round to one decimal place.fill in the blank 1 of 1 % c. How much would operating income increase if same-store sales increased by $800 million for the coming year, with no change in the contribution margin ratio or fixed costs? Round your answer to the nearest tenth of a million…
Delisa Corporation has two divisions: Division L and Division Q. Data from the most recent month appear below: Total Company Division L Division Q Sales $587,000 $172,000 $415,000 Variable expenses 376,090 98,040 278,050 Contribution margin 210,910 73,960 136,950 Traceable fixed expenses 105,290 30,870 74,420 Segment margin 105,620 $ 43,090 $ 62,530 Common fixed expenses 68,550 Net operating income $ 37,070 The break-even in sales dollars for Division Q is closest to:
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 $ 4,000,000 $ 3,000,000 $ 1,000,000 Variable expenses 1,300,000 900,000 400,000 Contribution margin 2,700,000 2,100,000 600,000 Fixed expenses 2,200,000 1,400,000 800,000 Net operating income (loss) $ 500,000 $ 700,000 $ (200,000) A study indicates that $340,000 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 10% decrease in the sales of the Hardware Department. Based on the visualization: The relevant fixed cost in the decision to discontinue the Linens Department is: multiple choice 1 $340,000. $460,000. $800,000. $600,000. The total foregone contribution margin associated with dropping…
Fortunate Inc. is involved in retailing and has three profit centers classified as “East” and “West” and “South.” East Division sold 38,000 units during the year for a selling price of $25 each—These items cost $15 each and had $2.50 of variable selling expenses (sales commissions) that could be directly traced to the units. West Division sold 16,000 units during the year for a selling price of $27 each—These items cost $17 each and that had $3 of variable selling expenses (sales commissions) that could be directly traced to the units. South Division sold 42,000 units during the year for a selling price of $26 each—These items cost $16 each and had $2 of variable selling expenses (sales commissions) that could be directly traced to the units. Fixed Division Operating Costs that could be directly traced to the divisions were $160,000 for East Division and $95,000 for West Division, and $200,000 for South Division. There were $230,000 of Corporate Costs (which was $20,000 for…
Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Net operating income (loss) Fixed expenses Total $ 4,290,000 1,286,000 3,004,000 2,370,000 $ 634,000 Department Linens $ 1,190,000 418,000 772,000 880,000 Hardware $ 3,100,000 868,000 2,232,000 1,490,000 $ 742,000 $ (108,000) A study indicates that $377,000 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 13% decrease in the sales of the Hardware Department. Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? Financial (disadvantage) $ 390,100
Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Total $ 4,360,000 1,375,000 2,985,000 2,220,000 $ 765,000 Department Hardware $ 3,160,000 962,000 2,198,000 1,320,000 $ 878,000 Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? Linens $ 1,200,000 413,000 787,000 900,000 $ (113,000) A study indicates that $371,000 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 13% decrease in the sales of the Hardware Department.
Crane Trivia Co. manufactures and sells two trivia products, the Square Trivia Game and the Round Trivia Game. Last quarter's operating profits, by product, and for the company as a whole, were as follows: Square Round Total Sales revenue $11,000 $6,860 $17,860 Variable expenses 5,000 2,910 7,910 Contribution margin 6,000 3,950 9,950 Fixed expenses 2,750 4,200 6,950 Operating income $ 3,250 $(250) $ 3,000 Forty percent of the Round Game's fixed costs could have been avoided if the game had not been produced or sold. If the Round Game had been discontinued before the last quarter, what would operating income have been for the company as a whole? Operating income without round $