Question

Lux Company operates two stores with the following information.    Store A    Store B   ...

Lux Company operates two stores with the following information.

   Store A    Store B    Total
Sales revenue 150,000 90,000 240,000
Variable Costs 90,000 54,000 144,000
Fixed Costs (Allocated) 40,000 40,000 80,000
Income (Loss)    20,000 (4,000) 16,000

Assume all fixed costs are unavoidable. If Store B is closed sales at Store A will increase by $50,000.  What is the increase or decrease in the company's net income if Store B is closed? Do not enter $ signs or commas. If it is a decrease use a negative sign. For example, enter a $10,000 increase as 10000. Enter a $10,000 decrease as a -10000:

Homework Answers

Answer #1

Answer-------------($16,000)

Net income would decrease by $16000

Working

Store A Store B Total
Sales revenue $2,00,000.00 $2,00,000.00
Variable Costs $1,20,000.00* $1,20,000.00
Fixed Costs (Allocated) $   40,000.00 $ 40,000.00 $   80,000.00
Income (Loss) $   40,000.00 $(40,000.00) $              -  

*Variable cost in store A will increase according to increase in sales in store A

.

Total net income Before closing store B $       16,000.00
Total net income After closing Store B $                      -  
Decrease in net income $    (16,000.00)
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
East Meets West Ltd. operates two stores, one in Victoria and another in Halifax. The following...
East Meets West Ltd. operates two stores, one in Victoria and another in Halifax. The following income statements were prepared for the most recent year The store equipment and leasehold improvements have no market value. The building leases can be cancelled without penalty. Required a. Calculate the dollar value of sales required for each store to break-even assuming that all of the fixed costs are to be covered? b. Should management close the Halifax store? Assume that corporate overhead would...
East Meets West Ltd. operates two stores, one in Victoria and another in Halifax. The following...
East Meets West Ltd. operates two stores, one in Victoria and another in Halifax. The following income statements were prepared for the most recent year The store equipment and leasehold improvements have no market value. The building leases can be cancelled without penalty. Required a. Calculate the dollar value of sales required for each store to break-even assuming that all of the fixed costs are to be covered? b. Should management close the Halifax store? Assume that corporate overhead would...
Total Store A Store B Sales $1,000,000 $400,000 $600,000 Variable expenses 580,000 160,000 420,000 Contribution margin...
Total Store A Store B Sales $1,000,000 $400,000 $600,000 Variable expenses 580,000 160,000 420,000 Contribution margin 420,000 240,000 180,000 Traceable fixed expenses 300,000 100,000 200,000 Store segment margin 120,000 140,000 -20,000 Common fixed expenses 50,000 20,000 30,000 Net operating income $70,000 $120,000 ($50,000) Due to its poor showing, consideration is being given to closing Store B. Studies show that if Store B is closed, one-fourth of its traceable fixed expenses will continue unchanged. The studies also show that closing Store...
Northern Stores is a retailer in the upper Midwest. The most recent monthly income statement for...
Northern Stores is a retailer in the upper Midwest. The most recent monthly income statement for Northern Stores is given below: Total Store I Store II Sales $2,100,000 $1,300,000 $800,000 Less: Variable Expenses 1,260,000 882,000 378,000 Contribution Margin 840,000 418,000 422,000 Less: Traceable fixed expenses 420,000 231,000 189,000 Segment margin 420,000 187,000 233,000 Less: Common fixed expenses 350,000 210,000 140,000 Net Income $70,000 $(23,000) $93,000 Northern is considering closing Store I. If Store I is closed, one-fourth of its traceable...
ABC Company operates three segments, of which two of them were showing a loss. Segment 1...
ABC Company operates three segments, of which two of them were showing a loss. Segment 1 Segment 2 Segment 3 Total Sales…………………… $100,000 $200,000 $300,000 $600,000 Less Cost of goods sold 80,000 150,000 200,000 430,000 Gross margin…………. 20,000 50,000 100,000 170,000 Less Operating expenses 30,000 70,000 70,000 170,000 Net operating income…. $(10,000) $(20,000) $30,000     $0                            For each segment, 40% of its cost of goods sold and operating expenses are variable expenses and the remaining balances are fixed...
Superior Markets, Inc., operates three stores in a large metropolitan area. A segmented absorption costing income...
Superior Markets, Inc., operates three stores in a large metropolitan area. A segmented absorption costing income statement for the company for the last quarter is given below: Superior Markets, Inc. Income Statement For the Quarter Ended September 30 Total North Store South Store East Store Sales $ 3,000,000 $ 720,000 $ 1,200,000 $ 1,080,000 Cost of goods sold 1,657,200 403,200 660,000 594,000 Gross margin 1,342,800 316,800 540,000 486,000 Selling and administrative expenses: Selling expenses: 817,000 231,400 315,000 270,600 Administrative expenses...
Problem 12-26 Close or Retain a Store [LO12-2] Superior Markets, Inc., operates three stores in a...
Problem 12-26 Close or Retain a Store [LO12-2] Superior Markets, Inc., operates three stores in a large metropolitan area. A segmented absorption costing income statement for the company for the last quarter is given below: Superior Markets, Inc. Income Statement For the Quarter Ended September 30 Total North Store South Store East Store Sales $ 4,000,000 $ 840,000 $ 1,600,000 $ 1,560,000 Cost of goods sold 2,200,000 495,000 847,000 858,000 Gross margin 1,800,000 345,000 753,000 702,000 Selling and administrative expenses:...
A company has two products: A and B. Product A has sales of $100,000, variable cost...
A company has two products: A and B. Product A has sales of $100,000, variable cost of $50,000, direct fixed costs of $40,000, and allocated common fixed costs of $20,000. Product B has sales of $150,000, variable cost of $70,000, direct fixed costs of $30,000, and allocated common fixed costs of $40,000. If product A is dropped, what will be the profit of the company?. Single choice. $10,000 profit $0 (no profit or loss) $10,000 loss $20,000 profit
Problem 11-26 Close or Retain a Store [LO11-2] Superior Markets, Inc., operates three stores in a...
Problem 11-26 Close or Retain a Store [LO11-2] Superior Markets, Inc., operates three stores in a large metropolitan area. A segmented absorption costing income statement for the company for the last quarter is given below: Superior Markets, Inc. Income Statement For the Quarter Ended September 30 Total North Store South Store East Store Sales $ 4,800,000 $ 960,000 $ 1,920,000 $ 1,920,000 Cost of goods sold 2,640,000 600,000 984,000 1,056,000 Gross margin 2,160,000 360,000 936,000 864,000 Selling and administrative expenses:...
Required information [The following information applies to the questions displayed below.]    This firm has two...
Required information [The following information applies to the questions displayed below.]    This firm has two offices—one in Paris and one in Italy. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company’s most recent year is given: Office Total Company Paris Italy Sales $ 450,000 100.0 % $ 90,000 100 % $ 360,000 100 % Variable expenses 243,000 54.0 % 27,000 30 % 216,000 60 % Contribution margin...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT