ABurrito Burro has been operating two take-outs burrito restaurants and two food trucks in Miami for thepast few years. Food preparation and storage for the restaurants and food trucks happens in therestaurants. In am attempt to improve the company's overall financial performance, Bob Burro, the owner,is considering whether he should close the restaurants. The contribution income statement for therestaurants is shown below.8910111213 Revenue14 Less: Variable Costs15 Contribution Margin16 Less: Fixed Costs17 Income from Operations181920Burrito BurroContribution Income StatementFor the Year Ended December 31, 20192223 Calculations:2425262728293031323334 Written response:Restaurants$$$$$BesIf the restaurants are closed, Burrito Burro will have to rent kitchen space to assist with food productionand storage, so 60% of the segments's fixed costs would remain with the company. The remaining fixedcosts would no longer be incurred if the restaurants are closed. Should the restaurants segment bediscontinued or retained?1,275,000900,000375,000400,000(25,000)AP-5B Requirements: Provide documentation and reasoning for this question: Should the restaurants21 segment be discontinued or retained? 34 Written response:35363738

Fixed costs are those costs which will not change with change in activity level. Variable costs…

Burrito Burro has been operating two take-outs burrito restaurants and two food trucks in Miami for the past few years. Food preparation and storage for the restaurants and food trucks happens in the restaurants. In am attempt to improve the company's overall financial performance, Bob Burro, the owner, is considering whether he should close the restaurants. The contribution income statement for the restaurants is shown below. Revenue Less: Variable Costs Contribution Margin Less: Fixed Costs Income from Operations Burrito Burro Contribution Income Statement For the Year Ended December 31, 2019 Restaurants Calculations: $ SSSSS $ $ $ $ 1,275,000 900,000 375,000 400,000 (25,000) If the restaurants are closed, Burrito Burro will have to rent kitchen space to assist with food production and storage, so 60% of the segments's fixed costs would remain with the company. The remaining fixed costs would no longer be incurred if the restaurants are closed. Should the restaurants segment be discontinued or retained? AP-5B Requirements: Provide documentation and reasoning for this question: Should the restaurants segment be discontinued or retained?

Burrito Burro has been operating two take-outs burrito restaurants and two food trucks in Miami for the past few years. Food preparation and storage for the restaurants and food trucks happens in the restaurants. In am attempt to improve the company's overall financial performance, Bob Burro, the owner, is considering whether he should close the restaurants. The contribution income statement for the restaurants is shown below. Revenue Less: Variable Costs Contribution Margin Less: Fixed Costs Income from Operations Burrito Burro Contribution Income Statement For the Year Ended December 31, 2019 Restaurants Calculations: $ SSSSS $ $ $ $ 1,275,000 900,000 375,000 400,000 (25,000) If the restaurants are closed, Burrito Burro will have to rent kitchen space to assist with food production and storage, so 60% of the segments's fixed costs would remain with the company. The remaining fixed costs would no longer be incurred if the restaurants are closed. Should the restaurants segment be discontinued or retained? AP-5B Requirements: Provide documentation and reasoning for this question: Should the restaurants segment be discontinued or retained?

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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