Exercise 1-30 (Static) Cost Data for Managerial Purposes (LO 1-3) Lessing Toy and Hobby (LTH) is a chain of hobby and craft stores in the Southeast. LTH operates multiple stores and is organized into two divisions: Northern and Southern. Individual stores are placed in one or the other division based on geography. Recent demographic changes in the Northern Division area have led to declining foot traffic and sales in the LTH stores. Senior corporate executives have been asking whether the chain should close those stores and focus on the stores in the Southern Division. The most recent income statement for the Northern Division follows. Lessing Toy and Hobby Northern Division For the Year Ending January 31 (S000) Sales revenue $ 12,040 Costs Cost of goods sold $ 6,020 Advertising 490 Administrative salaries 810 Sales commissions 1,624 Rent and occupancy expense 2, 058 Allocated corporate support 1,330 Total costs $ 12, 332 Net loss before tax benefit $ (292) Tax benefit at 25 % (73) Net loss S (219) The CEO has asked for your thoughts on the decision to close the Northern Division stores. If the Northern Division is eliminated and the stores closed, neither total corporate support costs nor operations or costs of the Southern Division stores are expected to change. Required: Using the worksheet below, determine which revenues and costs are probably differential or not differential for the decision to close the Northern Division stores. What will be the effect on LTH's income if the Northern Division stores are closed? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Using the worksheet below, determine which revenues and costs are probably differential or not differe close the Northern Division stores. Note: Enter you answer in
Exercise 1-30 (Static) Cost Data for Managerial Purposes (LO 1-3) Lessing Toy and Hobby (LTH) is a chain of hobby and craft stores in the Southeast. LTH operates multiple stores and is organized into two divisions: Northern and Southern. Individual stores are placed in one or the other division based on geography. Recent demographic changes in the Northern Division area have led to declining foot traffic and sales in the LTH stores. Senior corporate executives have been asking whether the chain should close those stores and focus on the stores in the Southern Division. The most recent income statement for the Northern Division follows. Lessing Toy and Hobby Northern Division For the Year Ending January 31 (S000) Sales revenue $ 12,040 Costs Cost of goods sold $ 6,020 Advertising 490 Administrative salaries 810 Sales commissions 1,624 Rent and occupancy expense 2, 058 Allocated corporate support 1,330 Total costs $ 12, 332 Net loss before tax benefit $ (292) Tax benefit at 25 % (73) Net loss S (219) The CEO has asked for your thoughts on the decision to close the Northern Division stores. If the Northern Division is eliminated and the stores closed, neither total corporate support costs nor operations or costs of the Southern Division stores are expected to change. Required: Using the worksheet below, determine which revenues and costs are probably differential or not differential for the decision to close the Northern Division stores. What will be the effect on LTH's income if the Northern Division stores are closed? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Using the worksheet below, determine which revenues and costs are probably differential or not differe close the Northern Division stores. Note: Enter you answer in
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Complete this question by entering your answers in the tabs below.
Required A Required B
Using the worksheet below, determine which revenues and costs are probably differential or not differe
close the Northern Division stores.
Note: Enter you answer in whole dollars, not in thousands e.g., 10,000 should be entered as 10,000,00
Sales revenue
Costs
X Answer is complete but not entirely correct.
Lessing Toy and Hobby
Northern Division Income Statement
Differential Revenues and Costs
For the Year Ending January 31
$
Cost of goods sold
Advertising
Administrative salaries
Sales commissions
Rent and occupancy expense
Allocated corporate support
Total differential costs
Net differential loss before income tax
Tax expense at 25% rate
Net differential loss from division
$
$
X $
X$
12,040 X Differential
6,020 X Differential
490 X Differential
810 X Differential
1,624 X Differential
2,058 X Differential
1,550 X Not differential
12,552
(292) X
(73) Not differential X
(219) X
< Required A
+
Required B >
![Exercise 1-30 (Static) Cost Data for Managerial Purposes (LO 1-3) Lessing Toy and Hobby (LTH) is a chain
of hobby and craft stores in the Southeast. LTH operates multiple stores and is organized into two divisions:
Northern and Southem. Individual stores are placed in one or the other division based on geography. Recent
demographic changes in the Northern Division area have led to declining foot traffic and sales in the LTH
stores. Senior corporate executives have been asking whether the chain should close those stores and focus
on the stores in the Southern Division. The most recent income statement for the Northern Division follows.
Lessing Toy and Hobby Northern Division For the Year Ending January 31 (5000) Sales revenue $ 12, 040
Costs Cost of goods sold $ 6,020 Advertising 490 Administrative salaries 810 Sales commissions 1,624 Rent
and occupancy expense 2,058 Allocated corporate support 1, 330 Total costs $ 12,332 Net loss before tax
benefit $ (292) Tax benefit at 25 % (73) Net loss $ (219) The CEO has asked for your thoughts on the
decision to close the Northern Division stores. If the Northern Division is eliminated and the stores closed,
neither total corporate support costs nor operations or costs of the Southern Division stores are expected to
change. Required: Using the worksheet below, determine which revenues and costs are probably differential
or not differential for the decision to close the Northern Division stores. What will be the effect on LTH's
income if the Northern Division stores are closed? Answer is complete but not entirely correct. Complete this
question by entering your answers in the tabs below. Using the worksheet below, determine which revenues
and costs are probably differential or not differe close the Northern Division stores. Note: Enter you answer in
whole dollars, not in thousands e.g., 10,000 should be entered as 10,000, 0\table[[Lessing Toy and Hobby
], [Northern Division Income Statement], [Differential Revenues and Costs], [For the Year Ending January 31], [
Sales revenue,, 12, 040 x, Differential], [Costs], [Cost of goods sold,,6, 020 x, Differential], [Advertising,,490x,
Differential vv](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7122bf1d-9710-4e16-a85b-2ad8aed7d0d0%2F63b23cd3-0688-4963-8c57-7265b22aefb9%2Fn1uhhv_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 1-30 (Static) Cost Data for Managerial Purposes (LO 1-3) Lessing Toy and Hobby (LTH) is a chain
of hobby and craft stores in the Southeast. LTH operates multiple stores and is organized into two divisions:
Northern and Southem. Individual stores are placed in one or the other division based on geography. Recent
demographic changes in the Northern Division area have led to declining foot traffic and sales in the LTH
stores. Senior corporate executives have been asking whether the chain should close those stores and focus
on the stores in the Southern Division. The most recent income statement for the Northern Division follows.
Lessing Toy and Hobby Northern Division For the Year Ending January 31 (5000) Sales revenue $ 12, 040
Costs Cost of goods sold $ 6,020 Advertising 490 Administrative salaries 810 Sales commissions 1,624 Rent
and occupancy expense 2,058 Allocated corporate support 1, 330 Total costs $ 12,332 Net loss before tax
benefit $ (292) Tax benefit at 25 % (73) Net loss $ (219) The CEO has asked for your thoughts on the
decision to close the Northern Division stores. If the Northern Division is eliminated and the stores closed,
neither total corporate support costs nor operations or costs of the Southern Division stores are expected to
change. Required: Using the worksheet below, determine which revenues and costs are probably differential
or not differential for the decision to close the Northern Division stores. What will be the effect on LTH's
income if the Northern Division stores are closed? Answer is complete but not entirely correct. Complete this
question by entering your answers in the tabs below. Using the worksheet below, determine which revenues
and costs are probably differential or not differe close the Northern Division stores. Note: Enter you answer in
whole dollars, not in thousands e.g., 10,000 should be entered as 10,000, 0\table[[Lessing Toy and Hobby
], [Northern Division Income Statement], [Differential Revenues and Costs], [For the Year Ending January 31], [
Sales revenue,, 12, 040 x, Differential], [Costs], [Cost of goods sold,,6, 020 x, Differential], [Advertising,,490x,
Differential vv
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