"It's close to a $40,000 loser and we ought to devote our efforts elsewhere," noted Cindy Mires, after reviewing financial reports of her company's attempt to offer a reduced-price daycare service to employees. The daycare's financial figures for the year just ended follow. Revenues Variable costs Traceable fixed costs Allocated corporate overhead $120,000 Required: 45,000 89,000 24,000 If the daycare service/center is closed, 70% of the traceable fixed cost will be avoided. In addition, the company will incur one-time closure costs of $6,800. A. Show calculations that support Mires' belief that the daycare center lost almost $40,000. ort your answer

FINANCIAL ACCOUNTING
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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31)
"It's close to a $40,000 loser and we ought to devote our efforts elsewhere," noted Cindy
Mires, after reviewing financial reports of her company's attempt to offer a reduced-price
daycare service to employees. The daycare's financial figures for the year just ended follow.
Revenues
Variable costs
Traceable fixed costs
Allocated corporate overhead
$120,000
45,000
89,000
24,000
If the daycare service/center is closed, 70% of the traceable fixed cost will be avoided. In
addition, the company will incur one-time closure costs of $6,800.
Required:
A. Show calculations that support Mires' belief that the daycare center lost almost $40,000.
B. Should the center be closed? Show calculations to support your answer.
C. What problem might the company experience if the center is closed?
Transcribed Image Text:31) "It's close to a $40,000 loser and we ought to devote our efforts elsewhere," noted Cindy Mires, after reviewing financial reports of her company's attempt to offer a reduced-price daycare service to employees. The daycare's financial figures for the year just ended follow. Revenues Variable costs Traceable fixed costs Allocated corporate overhead $120,000 45,000 89,000 24,000 If the daycare service/center is closed, 70% of the traceable fixed cost will be avoided. In addition, the company will incur one-time closure costs of $6,800. Required: A. Show calculations that support Mires' belief that the daycare center lost almost $40,000. B. Should the center be closed? Show calculations to support your answer. C. What problem might the company experience if the center is closed?
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