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Perez Corporation runs two convenience stores, one in Connecticut and one in Rhode Island. Operating income for each store in 2020 is as follows: (Click to view the operating income for the stores.) Requirement 1. By closing down the Rhode Island store, Perez can reduce overall corporate overhead costs by $43,000. Calculate Perez's operating income if it closes the Rhode Island store. Is Maria Lopez's statement about the effect of closing the Rhode Island store correct? Explain. Begin by calculating Perez's operating income if it closes the Rhode Island store. (Complete all input fields. Enter losses in revenues as a negative amount. Enter a "0" if the cost is not relevant. If the net effect is an operating loss enter the amount with parentheses or a minus sign.) Revenues Operating costs Cost of goods sold i (Click the icon to view the add-or-drop segments information.) Read the requirements. Lease rent (renewable each year) Labor costs (paid on an hourly basis) Depreciation of equipment Utilities (electricity, heating) Corporate overhead (Loss in Revenues) Savings in Costs Requirements - 1. By closing down the Rhode Island store, Perez can reduce overall corporate overhead costs by $43,000. Calculate Perez's operating income if it closes the Rhode Island store. Is Maria Lopez's statement about the effect of closing the Rhode Island store correct? Explain. 2. Calculate Perez's operating income if it keeps the Rhode Island store open and opens another store with revenues and costs identical to the Rhode Island store (including a cost of $20,000 to acquire equipment with a 1-year useful life and zero disposal value). Opening this store will increase corporate overhead costs by $4,000. Is Maria Lopez's statement about the effect of adding another store like the Rhode Island store correct? Explain. X

Perez Corporation runs two convenience stores, one in Connecticut and one in Rhode Island. Operating income for each store in 2020 is as follows: (Click to view the operating income for the stores.) Requirement 1. By closing down the Rhode Island store, Perez can reduce overall corporate overhead costs by $43,000. Calculate Perez's operating income if it closes the Rhode Island store. Is Maria Lopez's statement about the effect of closing the Rhode Island store correct? Explain. Begin by calculating Perez's operating income if it closes the Rhode Island store. (Complete all input fields. Enter losses in revenues as a negative amount. Enter a "0" if the cost is not relevant. If the net effect is an operating loss enter the amount with parentheses or a minus sign.) Revenues Operating costs Cost of goods sold i (Click the icon to view the add-or-drop segments information.) Read the requirements. Lease rent (renewable each year) Labor costs (paid on an hourly basis) Depreciation of equipment Utilities (electricity, heating) Corporate overhead (Loss in Revenues) Savings in Costs Requirements - 1. By closing down the Rhode Island store, Perez can reduce overall corporate overhead costs by $43,000. Calculate Perez's operating income if it closes the Rhode Island store. Is Maria Lopez's statement about the effect of closing the Rhode Island store correct? Explain. 2. Calculate Perez's operating income if it keeps the Rhode Island store open and opens another store with revenues and costs identical to the Rhode Island store (including a cost of $20,000 to acquire equipment with a 1-year useful life and zero disposal value). Opening this store will increase corporate overhead costs by $4,000. Is Maria Lopez's statement about the effect of adding another store like the Rhode Island store correct? Explain. X

FINANCIAL ACCOUNTING
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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Perez Corporation runs two convenience stores, one in Connecticut and one in Rhode Island. Operating income for each store in 2020 is as follows: (Click to view the operating income for the stores.) Requirement 1. By closing down the Rhode Island store, Perez can reduce overall corporate overhead costs by $43,000. Calculate Perez's operating income if it closes the Rhode Island store. Is Maria Lopez's statement about the effect of closing the Rhode Island store correct? Explain. Revenues Operating costs C Begin by calculating Perez's operating income if it closes the Rhode Island store. (Complete all input fields. Enter losses in revenues as a negative amount. Enter a "0" if the cost is not relevant. If the net effect is an operating loss enter the amount with parentheses or a minus sign.) Cost of goods sold Lease rent (renewable each year) Labor costs (paid on an hourly basis) Depreciation of equipment Utilities (electricity, heating) Corporate overhead Total operating costs Effect on operating income (loss) i (Click the icon to view the add-or-drop segments information.) Read the requirements. (Loss in Revenues) Savings in Costs Requirements 1. By closing down the Rhode Island store, Perez can reduce overall corporate overhead costs by $43,000. Calculate Perez's operating income if it closes the Rhode Island store. Is Maria Lopez's statement about the effect of closing the Rhode Island store correct? Explain. 2. Calculate Perez's operating income if it keeps the Rhode Island store open and opens another store with revenues and costs identical to the Rhode Island store (including a cost of $20,000 to acquire equipment with a 1-year useful life and zero disposal value). Opening this store will increase corporate overhead costs by $4,000. Is Maria Lopez's statement about the effect of adding another store like the Rhode Island store correct? Explain. Print - Done X
Transcribed Image Text:Perez Corporation runs two convenience stores, one in Connecticut and one in Rhode Island. Operating income for each store in 2020 is as follows: (Click to view the operating income for the stores.) Requirement 1. By closing down the Rhode Island store, Perez can reduce overall corporate overhead costs by $43,000. Calculate Perez's operating income if it closes the Rhode Island store. Is Maria Lopez's statement about the effect of closing the Rhode Island store correct? Explain. Revenues Operating costs C Begin by calculating Perez's operating income if it closes the Rhode Island store. (Complete all input fields. Enter losses in revenues as a negative amount. Enter a "0" if the cost is not relevant. If the net effect is an operating loss enter the amount with parentheses or a minus sign.) Cost of goods sold Lease rent (renewable each year) Labor costs (paid on an hourly basis) Depreciation of equipment Utilities (electricity, heating) Corporate overhead Total operating costs Effect on operating income (loss) i (Click the icon to view the add-or-drop segments information.) Read the requirements. (Loss in Revenues) Savings in Costs Requirements 1. By closing down the Rhode Island store, Perez can reduce overall corporate overhead costs by $43,000. Calculate Perez's operating income if it closes the Rhode Island store. Is Maria Lopez's statement about the effect of closing the Rhode Island store correct? Explain. 2. Calculate Perez's operating income if it keeps the Rhode Island store open and opens another store with revenues and costs identical to the Rhode Island store (including a cost of $20,000 to acquire equipment with a 1-year useful life and zero disposal value). Opening this store will increase corporate overhead costs by $4,000. Is Maria Lopez's statement about the effect of adding another store like the Rhode Island store correct? Explain. Print - Done X
Data table Revenues Operating costs Cost of goods sold Lease rent (renewable each year) Labor costs (paid on an hourly basis) Depreciation of equipment Utilities (electricity, heating) Allocated corporate overhead Total operating costs Operating income (loss) Print $ $ Connecticut Rhode Island Store Store 1,090,000 $ 750,000 90,000 48,000 28,000 41,000 52,000 1,009,000 Done 81,000 $ 860,000 660,000 72,000 47,000 20,000 51,000 38,000 888,000 (28,000) - X
Transcribed Image Text:Data table Revenues Operating costs Cost of goods sold Lease rent (renewable each year) Labor costs (paid on an hourly basis) Depreciation of equipment Utilities (electricity, heating) Allocated corporate overhead Total operating costs Operating income (loss) Print $ $ Connecticut Rhode Island Store Store 1,090,000 $ 750,000 90,000 48,000 28,000 41,000 52,000 1,009,000 Done 81,000 $ 860,000 660,000 72,000 47,000 20,000 51,000 38,000 888,000 (28,000) - X
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