HASF & company  sells paint and paint supplies carpet and wallpaper at a single store location in suburban Baltiomore Although the company has been very profitable over the year management has seen very profitable over the year management has seen a significant decline in wallpaper sales and earnings Much of this decline is attributable to the internet and to companies that advertise deeply discounted prices in magazines and offer customer free shipping and toll free telephone number recent figures follow      Paint and supplies  Carpeting  wallpaper  Total  sales  250,000 230,000 70,000 550,000 less variable cost  170,000 161,000 56,000 387,000 fixed costs  40,000 40,000 40,000 120,000 total cost  210,000 201,000 96,000 507,000 operating income  40,000 29,000 -26,000 43,000   Other information: Management is studying whether to drop wallpaper because of the changing market and accompanying loss if the line is dropped the following changes are expected to occur    1.      The vacated space will be remodeled at a cost of 6,200 and will be devoted to an expanded line of high and carpet sales of carpet are expected to increase by 60,000 and the line overall contribution margin ratio will rise by 5%    2.      Contemporaty can cut wallpapers fixed costs by 40%    3.      Sales of paint and paint supplies are expected to fall by 20%    4.      The firm will increase advertising expenditures by 12,500 to promote the expanded carpet line  Required:   At what amount of proift  will be decrease after the dropped

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

HASF & company  sells paint and paint supplies carpet and wallpaper at a single store location in suburban Baltiomore Although the company has been very profitable over the year management has seen very profitable over the year management has seen a significant decline in wallpaper sales and earnings Much of this decline is attributable to the internet and to companies that advertise deeply discounted prices in magazines and offer customer free shipping and toll free telephone number recent figures follow 

 

  Paint and supplies  Carpeting  wallpaper  Total 
sales  250,000 230,000 70,000 550,000
less variable cost  170,000 161,000 56,000 387,000
fixed costs  40,000 40,000 40,000 120,000
total cost  210,000 201,000 96,000 507,000
operating income  40,000 29,000 -26,000 43,000

 

Other information:

Management is studying whether to drop wallpaper because of the changing market and accompanying loss if the line is dropped the following changes are expected to occur 

 

1.      The vacated space will be remodeled at a cost of 6,200 and will be devoted to an expanded line of high and carpet sales of carpet are expected to increase by 60,000 and the line overall contribution margin ratio will rise by 5% 

 

2.      Contemporaty can cut wallpapers fixed costs by 40% 

 

3.      Sales of paint and paint supplies are expected to fall by 20% 

 

4.      The firm will increase advertising expenditures by 12,500 to promote the expanded carpet line 

Required:

 

At what amount of proift  will be decrease after the dropped

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Relevant cost analysis
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education