Question
Wasilko Corporation has two departments, Kids and Adults. The company’s most recent monthly contribution format income...
Wasilko Corporation has two departments, Kids and Adults. The company’s most recent monthly contribution format income statement follows:
|
Total |
Kids |
Adults |
|
|
Sales |
$4,200,000 |
$3,000,000 |
$1,200,000 |
|
Variable expenses |
2,000,000 |
1,500,000 |
500,000 |
|
Contribution Margin |
2,200,000 |
1,500,000 |
700,000 |
|
Fixed Expenses |
2,200,000 |
1,300,000 |
900,000 |
|
Net operating income (loss) |
0 |
200,000 |
(200,000) |
A study indicates that $250,000 of the fixed expenses being charged to the Adults Department are sunk costs or allocated costs that will continue even if the Adults Department is dropped. In addition, the elimination of the Adults Department will result in a 20% decrease in the sales of the Kids Department. If the Adults Department is dropped, what will be the effect on the net operating income of the company as a whole?
Multiple Choice
Decrease by $310,000
Decrease by $350,000
Decrease by $390,000
Increase by $390,000
Homework Answers
Answer #1
OPTION - DECREASE BY $350,000.
If you have any doubts please comment on the answer.
Not the answer you're looking for?
Similar Questions
Wonders Corporation has two departments, Kids and Adults. The company’s most recent monthly contribution format income...
Wonders Corporation has two departments, Kids and Adults. The
company’s most recent monthly contribution format income statement
follows:
Department
Total
Kids
Adults
Sales
$4,200,000
$3,000,000
$1,200,000
Variable expenses
2,000,000
1,500,000
500,000
Contribution Margin
2,200,000
1,500,000
700,000
Fixed Expenses
2,200,000
1,300,000
900,000
Net operating income (loss)
0
200,000
(200,000)
A study indicates that $250,000 of the fixed expenses being
charged to the Adults Department are sunk costs or allocated costs
that will continue even if the Adults Department is dropped. In...
Wasilko Corporation has two departments, Kids and Adults. The company’s most recent monthly contribution format income...
Wasilko Corporation has two departments, Kids and Adults. The
company’s most recent monthly contribution format income statement
follows:
Department
Total
Kids
Adults
Sales
$4,200,000
$3,000,000
$1,200,000
Variable expenses
2,000,000
1,500,000
500,000
Contribution Margin
2,200,000
1,500,000
700,000
Fixed Expenses
2,200,000
1,300,000
900,000
Net operating income (loss)
0
200,000
(200,000)
A study indicates that $50,000 of the fixed expenses being
charged to the Adults Department are sunk costs or allocated costs
that will continue even if the Adults Department is dropped. In...
Bed & Bath, a retailing company, has two departments—Hardware and Linens. The company’s most recent monthly...
Bed & Bath, a retailing company, has two
departments—Hardware and Linens. The company’s most recent monthly
contribution format income statement follows:
Department
Total
Hardware
Linens
Sales
$
4,130,000
$
3,020,000
$
1,110,000
Variable expenses
1,293,000
880,000
413,000
Contribution margin
2,837,000
2,140,000
697,000
Fixed expenses
2,200,000
1,400,000
800,000
Net operating income (loss)
$
637,000
$
740,000
$
(103,000
)
A study indicates that $375,000 of the fixed expenses being
charged to Linens are sunk costs or allocated costs that will
continue...
Bed & Bath, a retailing company, has two departments—Hardware and Linens. The company’s most recent monthly...
Bed & Bath, a retailing company, has two
departments—Hardware and Linens. The company’s most recent monthly
contribution format income statement follows:
Department
Total
Hardware
Linens
Sales
$
4,270,000
$
3,190,000
$
1,080,000
Variable
expenses
1,236,000
833,000
403,000
Contribution
margin
3,034,000
2,357,000
677,000
Fixed
expenses
2,200,000
1,400,000
800,000
Net operating
income (loss)
$
834,000
$
957,000
$
(123,000
)
A study indicates that $374,000 of the fixed expenses being
charged to Linens are sunk costs or allocated costs that will
continue...
Bed & Bath, a retailing company, has two departments—Hardware and Linens. The company’s most recent monthly...
Bed & Bath, a retailing company, has two
departments—Hardware and Linens. The company’s most recent monthly
contribution format income statement follows:
Department
Total
Hardware
Linens
Sales
$
4,330,000
$
3,180,000
$
1,150,000
Variable expenses
1,245,000
825,000
420,000
Contribution margin
3,085,000
2,355,000
730,000
Fixed expenses
2,370,000
1,480,000
890,000
Net operating income (loss)
$
715,000
$
875,000
$
(160,000
)
A study indicates that $372,000 of the fixed expenses being
charged to Linens are sunk costs or allocated costs that will
continue...
Bed & Bath, a retailing company, has two departments—Hardware and Linens. The company’s most recent monthly...
Bed & Bath, a retailing company, has two
departments—Hardware and Linens. The company’s most recent monthly
contribution format income statement follows:
Department
Total
Hardware
Linens
Sales
$
4,150,000
$
3,020,000
$
1,130,000
Variable expenses
1,244,000
833,000
411,000
Contribution margin
2,906,000
2,187,000
719,000
Fixed expenses
2,320,000
1,490,000
830,000
Net operating income (loss)
$
586,000
$
697,000
$
(111,000
)
A study indicates that $372,000 of the fixed expenses being
charged to Linens are sunk costs or allocated costs that will
continue...
Bed & Bath, a retailing company, has two departments—Hardware and Linens. The company’s most recent monthly...
Bed & Bath, a
retailing company, has two departments—Hardware and Linens. The
company’s most recent monthly contribution format income statement
follows:
Department
Total
Hardware
Linens
Sales
$
4,130,000
$
3,110,000
$
1,020,000
Variable
expenses
1,209,000
804,000
405,000
Contribution
margin
2,921,000
2,306,000
615,000
Fixed
expenses
2,300,000
1,410,000
890,000
Net operating
income (loss)
$
621,000
$
896,000
$
(275,000
)
A study indicates that
$378,000 of the fixed expenses being charged to Linens are sunk
costs or allocated costs that will continue...
Bed & Bath, a retailing company, has two departments, Hardware and Linens. The company’s most recent...
Bed & Bath, a retailing company, has two departments,
Hardware and Linens. The company’s most recent monthly contribution
format income statement follows:
Department
Total
Hardware
Linens
Sales
$
4,240,000
$
3,140,000
$
1,100,000
Variable
expenses
1,297,000
882,000
415,000
Contribution
margin
2,943,000
2,258,000
685,000
Fixed expenses
2,290,000
1,420,000
870,000
Net operating income
(loss)
$
653,000
$
838,000
$
(185,000
)
A study indicates that $378,000 of the fixed expenses being
charged to Linens are sunk costs or allocated costs that will...
Bed & Bath, a retailing company, has two departments, Hardware and Linens. The company’s most recent...
Bed & Bath, a retailing company, has two departments,
Hardware and Linens. The company’s most recent monthly contribution
format income statement follows:
Department
Total
Hardware
Linens
Sales
$
4,340,000
$
3,150,000
$
1,190,000
Variable
expenses
1,361,000
946,000
415,000
Contribution
margin
2,979,000
2,204,000
775,000
Fixed expenses
2,220,000
1,380,000
840,000
Net operating income
(loss)
$
759,000
$
824,000
$
(65,000
)
A study indicates that $378,000 of the fixed expenses being
charged to Linens are sunk costs or allocated costs that will...
Bed & Bath, a retailing company, has two departments—Hardware and Linens. The company’s most recent monthly...
Bed & Bath, a retailing company, has two
departments—Hardware and Linens. The company’s most recent monthly
contribution format income statement follows:
Department
Total
Hardware
Linens
Sales
$
4,120,000
$
3,050,000
$
1,070,000
Variable expenses
1,315,000
905,000
410,000
Contribution margin
2,805,000
2,145,000
660,000
Fixed expenses
2,320,000
1,450,000
870,000
Net operating income (loss)
$
485,000
$
695,000
$
(210,000
)
A study indicates that $374,000 of the fixed expenses being
charged to Linens are sunk costs or allocated costs that will
continue...
ADVERTISEMENT
Need Online Homework Help?
Get Answers For Free
Most questions answered within 1 hours.
ADVERTISEMENT
Active Questions
asked 22 minutes ago
asked 37 minutes ago
asked 48 minutes ago
asked 52 minutes ago
asked 57 minutes ago
asked 57 minutes ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 1 hour ago
asked 2 hours ago
asked 2 hours ago