Ilas tWo departments-Home and Garden. The company's most recent contribution format income statement follows: Total Home Garden Sales $800,000 $350,000 $450,000 Variable expenses Contribution margin 320,000 120,000 200,000 480,000 230,000 250,000 Fixed expenses 400,000 140,000 260,000 Net operating income (loss) $ 80,000 $ 90,000 $(10,000) The retailer is considering whether It should close the Garden Department. Further analysis revealed that, of the fixed expenses being charged to the Garden Department, $140,000 are sunk costs or allocated costs that will continue If Garden is discontinued. In addition, If the Garden Department is discontinued, sales in the Home Department will drop by 5%. How much does the company's profit increase or decrease if the Garden Department is discontinued? (If a decrease, the dollar amount is indicated in parentheses, ie., $ (1,000).)

Ilas tWo departments-Home and Garden. The company's most recent contribution format income statement follows: Total Home Garden Sales $800,000 $350,000 $450,000 Variable expenses Contribution margin 320,000 120,000 200,000 480,000 230,000 250,000 Fixed expenses 400,000 140,000 260,000 Net operating income (loss) $ 80,000 $ 90,000 $(10,000) The retailer is considering whether It should close the Garden Department. Further analysis revealed that, of the fixed expenses being charged to the Garden Department, $140,000 are sunk costs or allocated costs that will continue If Garden is discontinued. In addition, If the Garden Department is discontinued, sales in the Home Department will drop by 5%. How much does the company's profit increase or decrease if the Garden Department is discontinued? (If a decrease, the dollar amount is indicated in parentheses, ie., $ (1,000).)

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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