Niklos Boot Co. sells men's, women's, and children's boots. For each type of boot sold, it operates a separate department that has its own manager. The manager of the men's department has a sales staff of nine employees, the manager of the women's department has six employees, and the manager of the children's department has three employees. All departments are housed in a single store. In recent years, the children's department has operated at a net loss and is expected to continue to do so. Last year's income statements follow. Men's Department ($) Women's Department ($) Children's Department ($) Sales 700,000 500,000 200,000 Cost of goods sold (272,500) (182,000) (103,875) Gross margin 427,500 318,000 96,125 Department manager's salary (66,000) (55,000) (35,000) Sales commissions (120,200) (89,600) (34,900) Rent on store lease (35,000) (35,000) (35,000) Store utilities (18,000) (18,000) (18,000) Net income (loss) 188,300 120,400 (26,775) Required: Calculate the contribution to profit of the children's department.

Niklos Boot Co. sells men's, women's, and children's boots. For each type of boot sold, it operates a separate department that has its own manager. The manager of the men's department has a sales staff of nine employees, the manager of the women's department has six employees, and the manager of the children's department has three employees. All departments are housed in a single store. In recent years, the children's department has operated at a net loss and is expected to continue to do so. Last year's income statements follow. Men's Department ($) Women's Department ($) Children's Department ($) Sales 700,000 500,000 200,000 Cost of goods sold (272,500) (182,000) (103,875) Gross margin 427,500 318,000 96,125 Department manager's salary (66,000) (55,000) (35,000) Sales commissions (120,200) (89,600) (34,900) Rent on store lease (35,000) (35,000) (35,000) Store utilities (18,000) (18,000) (18,000) Net income (loss) 188,300 120,400 (26,775) Required: Calculate the contribution to profit of the children's department.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter17: Activity Resource Usage Model And Tactical Decision Making

Section: Chapter Questions

Problem 6E: Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of...

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