newconnect.mheducation.com |? ? Connect(name17) Han Products Manufactures 30,000
ID: 2408899 • Letter: N
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newconnect.mheducation.com |? ? Connect(name17) Han Products Manufactures 30,000 Units Of Part S-6... I Chegg.com Ch. 12 HW Part 1-S. Brown ONLY G Saved Help Save & Exit Submit Check my work 10 Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: 10 points Department Total Hardware Linens $4,140,000 3,110,000 1,030,000 403,000 627,000 900,000 Sales 04:09:30Variable expenses 805,000 Contribution margin Fixed expenses Net operating income (loss) 1,208,000 2,932,000 2,305, 000 2,340,000 1,440,000 eBook $592,000 865,000(273,000) Print References A study indicates that $376,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continue even if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 17% decrease in the sales of the Hardware Department. Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? Mc Graw Hill KPrev10 of 10 NextExplanation / Answer
10) Differential analysis :
Financial disadvantage = (97150-592000) = -494850
12) Differential analysis :
Financial advantage = 16000
Total income when lines continue Total income when lines discontinue Sales 4140000 2581300 Variable cost -1208000 668150 contribution margin 2932000 1913150 Fixed expense -2340000 -1816000 Net operating income 592000 97150Related Questions
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