Rahul Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution formatincome statement follows:SalesVariable expensesFixed expensesContribution marginNet operating income (loss)Total$ 4,220,0001,396,0002,824,0002,150,000$ 674,000Hardware$ 3,150,000DepartmentLinens$ 1,070,000417,000653,000850,000$ 871,000$ (197,000)979,0002,171,0001,300,000A study indicates that $375,000 of the fixed expenses being charged to Linens are sunk costs or allocated costs that will continueeven if the Linens Department is dropped. In addition, the elimination of the Linens Department will result in a 12% decrease in thesales of the Hardware Department.Required:What is the financial advantage (disadvantage) of discontinuing the Linens Department?Financial (disadvantage)

Step 1: Net operating income (loss) - New HardwareLinenTotalSales$2,772,000 $2,772,000Variable…

Answered: Bed & Bath, a retailing company, has…

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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k ces Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Total $ 4,070,000 1,362,000 2,708,000 2,300,000 $ 408,000 Show All Items Department Hardware $ 3,040,000 952,000 2,088,000 1,410,000 $ 678,000 Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? A study indicates $378,000 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 12% decrease in the sales of the Hardware Department. Linens $ 1,030,000 410,000 620,000 890,000 $ (270,000)
Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Total $4,180,000. 1,365,000 2,815,000 2,230,000 $ 585,000 Department Hardware $ 3,080,000 963,000 2,117,000 1,340,000 $ 777,000 Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? Linens $ 1,100,000 402,000 698,000 890,000 $(192,000) A study indicates that $378,000 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 Hardware Department.
Contribution Margin and Contribution Margin Ratio For a recent year, McDugal's company-owned restaurants had the following sales and expenses (in millions): Sales Food and packaging Payroll Occupancy (rent, depreciation, etc.) General, selling, and admin. expenses Other expense Total expenses Operating income (loss) $4,310 3,800 4,190 2,200 290 % $14,500 (14,790) $(290) Assume that the variable costs consist of food and packaging, payroll, and 40% of the general, a. What is McDonald's contribution margin? Enter your answer in million, rounded to one decimal place. million b. What is McDonald's contribution margin ratio? Round your percentage answer to one decimal place. and nistrative expenses. c. How much would operating income increase if same-store sales increased by $900 million for the coming year, with no change in the contribution margin ratio or fixed costs?
Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Fixed expenses Contribution margin Net operating income (loss) Total $ 4,210,000 1,297,000 2,913,000 2,250,000 $ 663,000 Department Linens $ 1,150,000 413,000 737,000 830,000 Hardware $ 3,060,000 884,000 2,176,000 1,420,000 $ 756,000 $ (93,000) A study indicates that $374,000 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 16% decrease in the sales of the Hardware Department. Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department?
Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Total $ 4,150,000 1,205,000 2,945,000 2,320,000 $ 625,000 Department Hardware $ 3,010,000 803,000 2,207,000 1,470,000 $ 737,000 Linens $ 1,140,000 402,000 738,000 850,000 $ (112,000) A study indicates that $378,000 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 18% decrease in the sales of the Hardware Department. Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department?
Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format. income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Total $ 4,300,000 1,347,000 2,953,000 2,200,000 $ 753,000 Hardware $ 3,160,000 Department Linens $ 1,140,000 404,000 736,000 850,000 $ 867,000 $ (114,000) 943,000 2,217,000 1,350,000 A study indicates $379,000 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 16% decrease in the sales of the Hardware Department Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? Financial (disadvantage) $ (610,760)
Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Total $ 4,130,000 1,223,000 2,907,000 2,160,000 $ 747,000 Department Hardware $ 3,060,000 814,000 2,246,000 1,310,000 $936,000 Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? Financial (disadvantage) Linens $ 1,070,000 409,000 661,000 850,000 $ (189,000) A study indicates that $377,000 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 18% decrease in the sales of the Hardware Department.
Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Fixed expenses Contribution margin Net operating income (loss) 1,307,000 Department Total $ 4,210,000 Hardware $ 3,040,000 Linens $ 1,170,000 403,000 767,000 840,000 $ (73,000) 2,903,000 2,290,000 $ 613,000 904,000 2,136,000 1,450,000 $ 686,000 A study indicates that $379,000 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 15% decrease in the sales of the Hardware Department. Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? Financial (disadvantage)
Bed & Bath, a retailing company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Total $ 4,070,000 1,273,000 2,797,000 2,220,000 $ 577,000 Financial (disadvantage) I Department Hardware $ 3,060,000 870,000 2,190,000 1,370,000 $ 820,000 Required: What is the financial advantage (disadvantage) of discontinuing the Linens Department? 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 18% decrease in the sales of the Hardware Department. Linens $ 1,010,000 403,000 607,000 850,000 $ (243,000)
Bed & Bath, a retalling company, has two departments-Hardware and Linens. The company's most recent monthly contribution format income statement follows: Sales Variable expenses Contribution margin Fixed expenses Net operating income (loss) Total $ 4,220,000 1,220,000 3,000,000- 2,340,000 5.660,000 Department Hardware $ 3,200,000 819,000 2,381,000 1,490,000 $ 891,000 Linens $1,020,000 401,000 619,000 850,000 $ (231,000) A study indicates $375,000 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? Financial (disadvantage)
Consider the following Information for the business Harry's Vintage Records. Actuals from the year ended 31st December 2021; Total Sales Revenue Total Fixed Costs $380,000 $90,000 0.20 Contribution Margin Ratio Calculate Harry's profit or loss in 2021 Select one: O a. (13,000) O b. 11,000 c. 12,000 d. (14,000)
Contribution margin and contribution margin ratio For a recent year, McDonald's (MCD) company-owned restaurants had the following sales and expenses (in millions): Sales Food and paper D Payroll and employee benefits Occupancy and other expenses General, selling, and administrative expenses million $19,207.8 $(2,564.2) (2,416.4) (4,357.6) (2,545.6) Operating income Assume that the variable costs consist of food and paper, payroll, 25% of occupancy and other expenses, and 40% of the general, selling, and administrative expenses. a. What is McDonald's contribution margin? Round to the nearest tenth of a million (one decimal place). $(11,883.8) $7,324.0 b. What is McDonald's contribution margin ratio? Round to one decimal place. % million How much would operating income increase if same-store sales lecreased by $800 million for the coming year, with no change in the contribution margin ratio or fixed costs? Re decimal place).

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