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?

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter5: Activity-based Costing And Management

Section: Chapter Questions

Problem 57P: Customers as a Cost Object Morrisom National Bank has requested an analysis of checking account...

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Current business segment operations for Whitman, a mass retailer, are presented below. Merchandise Automotive Restaurant Total $500,000 $400,000 $100,000 $1,000,000 200,000 300,000 70,000 570,000 Sales Variable costs Fixed costs 50,000 250,000 Operating income (loss) $100,000 $100,000 $-20,000 $180,000 Management is contemplating the discontinuance of the Restaurant segment because "it is losing money." If this segment is discontinued, $30,000 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? Select one: a. $380,000 b. $367,650 X c. $160,000 d. $220,000 100,000 100,000
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