Pad 5:20 PM ezto mheducation com HW7 instructions help Question 9 (of 9) Save &
ID: 2547970 • Letter: P
Question
Pad 5:20 PM ezto mheducation com HW7 instructions help Question 9 (of 9) Save & Exit Submit value 5.00 points Bed & Bath, a retailing company, has two departments, Hardware and Linens. The company's most recent monthly contribution format income statement follows: Total Hardware Linens Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) S 4,130,000 $3,100,000 1,030,000 948,000 2.152,000 1,310,000 $ 633,000 842,000 (209,000) 1,367,000 2,763,000 2,130,000 419,000 611,000 820,000 A study indicates that $372,000 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 13% decrease in the sales of the Required If the Linens Department is dropped, what will be the effect on the net operating income of the company as a whole? net incomeExplanation / Answer
New contribution margin of Hardware=$2,152,000(1-0.13)=$1872240
Less:FC for Hardware=(1,310,000)
Less:FC for Linens=(372000)
New net operating income for the company=$190240
Hence Decrease in net operating income=(633000-190240)=$442760.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.