Bugs Bunny Clothing Company operates a children's and women's department. The latest monthly income statement for each department and the company as a whole is shown below: Sales COGS Sales Commission Contribution Margin Store Rent and General Fixed Overhead Cost Store Manager's Salary Department Manager's Salary Product Advertising Children's Net Income $150,000 (30,000) 20,000 (100,000) (100,000) (200,000) (10,000) (5,000) Women's (5,000) $225,000 (25,000) (45,000) Edit View Insert Format Tools Table (22,500) (52,500) 102,500 122,500 (10,000) Total (10,000) $375,000 (7,500) $30,000 (70,000) (20,000) (15,000) $(25,000) Bugs Bunny recently received an offer to sublease the space in the store that is currently being used by the children's department at a rate of $8,000 per month. What is your recommendation to Bugs Bunny? Support your recommendation numerically. (12,500) $5,000

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Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit.  Overhead expenses depend upon the nature of the business operations.