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Current business segment operations for Whitman, a mass retailer, are presented below. Merchandise Automotive Restaurant Total Sales Variable costs Fixed costs Operating income (loss) $200,000 120,000 40,000 $40,000 $160,000 $40,000 $400,000 80,000 28,000 228,000 40,000 $40,000 20,000 100,000 $(8,000) $72,000 Management is contemplating the discontinuance of the Restaurant segment since "it is losing money." If this segment is discontinued, $12,000 of its fixed costs will be eliminated. In addition, Merchandise and Automotive sales will decrease 5% from their current levels. What will Whitman's total contribution margin be if the Restaurant segment is discontinued?

Current business segment operations for Whitman, a mass retailer, are presented below. Merchandise Automotive Restaurant Total Sales Variable costs Fixed costs Operating income (loss) $200,000 120,000 40,000 $40,000 $160,000 $40,000 $400,000 80,000 28,000 228,000 40,000 $40,000 20,000 100,000 $(8,000) $72,000 Management is contemplating the discontinuance of the Restaurant segment since "it is losing money." If this segment is discontinued, $12,000 of its fixed costs will be eliminated. In addition, Merchandise and Automotive sales will decrease 5% from their current levels. What will Whitman's total contribution margin be if the Restaurant segment is discontinued?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Current business segment operations for Whitman, a mass retailer, are presented below. Merchandise Automotive Restaurant Total Sales Variable costs Fixed costs Operating income (loss) $200,000 120,000 40,000 $40,000 $160,000 $40,000 $400,000 80,000 28,000 228,000 40,000 $40,000 20,000 100,000 $(8,000) $72,000 Management is contemplating the discontinuance of the Restaurant segment since "it is losing money." If this segment is discontinued, $12,000 of its fixed costs will be eliminated. In addition, Merchandise and Automotive sales will decrease 5% from their current levels. What will Whitman's total contribution margin be if the Restaurant segment is discontinued?
Transcribed Image Text:Current business segment operations for Whitman, a mass retailer, are presented below. Merchandise Automotive Restaurant Total Sales Variable costs Fixed costs Operating income (loss) $200,000 120,000 40,000 $40,000 $160,000 $40,000 $400,000 80,000 28,000 228,000 40,000 $40,000 20,000 100,000 $(8,000) $72,000 Management is contemplating the discontinuance of the Restaurant segment since "it is losing money." If this segment is discontinued, $12,000 of its fixed costs will be eliminated. In addition, Merchandise and Automotive sales will decrease 5% from their current levels. What will Whitman's total contribution margin be if the Restaurant segment is discontinued?
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