Your Retail Store's accountant prepared the following income statement for the ladies' accessories product line:SalesLess: Variable expensesContribution marginLess: Fixed expenses:WagesInsurance on inventoryAdvertising$2,975,0001,398, 2501,576,750$1,871,00059,500654, 5001,785,000Net operating income (loss)$ (208,250)Management is concerned about the loss and is considering dropping the product line. If the product line is dropped, a job has to b-created elsewhere for a long-term employee currently earning an annual salary of $89,250.Requlred:Calculate the increase or decrease in the operating income in both alternatives.Keep Accesories Product LineDrop Accesories Product LineSalesFixed expensesNet operating income (loss)Should the ladies' accessories product line be dropped?

Incremental Analysis: Incremental analysis refers to the analysis of differential revenue that could…

Answered: Requlred: Calculate the increase or…

Business

Accounting

Requlred: Calculate the increase or decrease in the operating income in both alternatives.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Define each of the following terms:g. Market Value Added; Economic Value Added

A: We can define the terms as follows:

Q: RUE OR FALSE Net income under GAAP highlights differences between variable and fixed costs.

A: Answer: Net income under GAAP highlights differences between variable and fixed costs. The…

Q: The increase/decrease in variable cost from existing level to the new level is called as __cost. a.…

A: Variable cost tends to increase or decrease with increased or decreased volume of production whereas…

Q: When Total Contribution magrin equals total fixed costs, this indicates operating income True…

A: If the contribution margin is equal to the total fixed cost that means it a situation of the…

Q: All of the following items would appear on the balance sheet except Select one: O a. current…

A: A balance sheet is one type of financial document that shows a company's financial situation as of a…

Q: when total contribution margin equals total fixed cost this indicates operating income true false

A: First we understand contribution margin Contribution margin means Variable cost deduct from Sales…

Q: Which method results in a more realistic amount for income because it matches the most current costs…

A: The current costs is based on the purchasing of the latest products which means the having book…

Q: Total profit is defined as total revenue, R(x), minus total cost, C(x), and is given by the function…

A: Profit Function: Profit is the result from deducting the cost or the expenses to the revenue. It…

Q: can you now calculate the gross profit ?

A: Gross profit can be defined as the net sales revenue earned by business over a particular period of…

Q: Define increase or decrease of credits.

A: Definition: Account: Account is the basic record that reports all changes in the value of…

Q: (Profit) What is the impact of decreasing/increasing radius kettle (m) with regarding to heat time?…

A: Just as radius kettle (m) and heat time are correlated so is profits being earned or generated by a…

Q: On a cost-volume-profit graph, when the Total Cost line is higher than the Total Revenue line, the…

A: Solution:- Cost-volume-profit graph is the graph which measures the loss, profit and break-even…

Q: Describe the following terms: (a) residual value, (b) guaranteed residual value, and (c) initial…

A: (a) Residual value: It is the projected ending value of an asset after its useful life or lease…

Q: What is operating profitability ratio (OP)?

A: These ratios evaluate a firm’s ability to earn profits. They help the stakeholders of the company to…

Q: Comparison of NPV, IRR or Payback period

A: The net present value (NPV) is the difference between the present value of cash inflows and…

Q: Define ( a ) contribution margin, ( b ) contribution marginratio, and ( c ) average contribution…

A: Contribution margin helps management to determine the amount of sales revenue left after considering…

Q: Which of the following statement is correct for relevant costs? a. It is avoidable, future and…

A: Relevant cost are those costs which are relevant for decision making. A cost is judged to be…

Q: Contribution margin is equal to a. Sales - Fixed expenses b. Sales - Selling expenses…

A: Contribution margin refers to the amount of sales revenue left after deducting variable cost.

Q: In making a short-term special decision, which of the following is MOST important? a. Use a…

A: Solution Concept The decision that is to be taken differs from one another on the basis of the time…

Q: Variable costing net operating income is usually closer to the net cash flow of a period than is…

A: Variable costing: It is a costing method that includes only variable cost in the product cost. It…

Q: What is the gross profit declined due to increase in cost in the amount?

A: Gross profit refers to the profit calculated after considering the costs associated with the…

Q: How do you calculate the breakeven point in revenues?

A: Break-even point is the level at which profit is zero; that is, at the Break-even level, expenses…

Q: What would the gross profit on this be?

A: Gross profit: The difference between the sales and the cost of goods sold is called gross profit.…

Q: In describing the cost formula equation, Y = a + bX, which of the following is correct:

A: The cost volume formula is denoted by - Y= a + bx where- “Y” is total cost “a” is the total fixed…

Q: Define the term Annual operating cost:?

A: MEANING OF OPERATING COST The sum total of operating expenses and cost of goods sold is called…

Q: A realized return is the rate of return actually earned on an investment. Group of answer choices…

A: Return: Return is defined as the money attained or lost on an investment through certain time…

Q: When using CVP Analysis, Net Profit (positive NI) would occur when Fixed Costs (FC) exceed total…

A: Net income as per CVP analysis - sales - variable cost = contribution contribution - fixed cost =…

Q: n Required information [The following information applies to the questions displayed below.] Oslo…

A: Answer Formula = Sales - Variable Cost = Contribution margin Contribution margin in…

Q: are return on investment, residual income, and EVA qualitative components?

A: Qualitative components refer to the intangible effect of the events and transactions of business…

Q: Which of the following option shows the rate at which company is earning profit? Select one: a. All…

A: The question is multiple choice question. Required Choose the Correct Option.

Q: Variable cost = Total cost - Fixed cost - Net profit) you have not consider the net profit in the…

A: Variable costs are those which remain same in per unit but change in total.Fixed costs are those…

Q: Explain the process of Rate-of-Return Calculation with Excel?

A: Rate of return is the rate expressed in terms of percentage which an investor expects from the…

Concept explainers

Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.

Question

Your Retail Store's accountant prepared the following income statement for the ladies' accessories product line:
Sales
Less: Variable expenses
Contribution margin
Less: Fixed expenses:
Wages
Insurance on inventory
Advertising
$2,975,000
1,398, 250
1,576,750
$1,871,000
59,500
654, 500
1,785,000
Net operating income (loss)
$ (208,250)
Management is concerned about the loss and is considering dropping the product line. If the product line is dropped, a job has to b-
created elsewhere for a long-term employee currently earning an annual salary of $89,250.
Requlred:
Calculate the increase or decrease in the operating income in both alternatives.
Keep Accesories Product Line
Drop Accesories Product Line
Sales
Fixed expenses
Net operating income (loss)
Should the ladies' accessories product line be dropped?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

after analyzing the skeletal profit and loss statement, a retailer is suffering a loss. list three ways and give examples of what they can do to turn the loss into profit. (Please explain)
Please do not give solution in image format thanku
I need help getting the Cost of Good Sold. 107,000 is not correct.
after analyzing the skeletal profit and loss statement, a retailer is suffering a loss. lost three wats and give examples of what they can do to turn the loss into profit
The answers in image "Q PT2" are incorrect and I am unsure of how to fix them. Please help! Thank you! :)
Please check if my total selling and administrative expenses is correct. Put an explanation why is it correct or not.
Your answer is correct. Fill in the missing amounts. Yoste Company Noone Company Sales revenue $90,000 24 105000 Sales returns and allowances 6000 5,000 Net sales 84,000 100,000 Cost of goods sold 58,000 60000 Gross profit 26000 40,000 Operating expenses 14,380 23000 Net income 11620 17,000 eTextbook and Media X Your answer is incorrect. Calculate the profit margin and the gross profit rate for each company. (Round answers to 1 decimal place, eg. 15.5%.) Yoste Company Noone Company Profit margin % % Gross profit rate % %
What would the total expense be?
I. Solve the following problem using MS Excel In many situations, a retailer may not compile a profit or loss statement for individual departments. Suppose that you are a retail buyer, and you decide to recreate the statement for your own department using the following data: Gross sales of $72,300.00, net sales of $60,900.00, opening inventory of $13,900.00, ending inventory of $19,400.00, purchases of $14,000.00, inward freight of 2%, cash discounts of 5%, returns to vendors of $500.00, alterations and workroom costs of 3%, direct expenses of $19,600.00 and total expenses worth $35,000.00, complete the profit or loss statement.(Hint: Remember that freight and cash discount %’s are calculated as % of Purchases, while the alteration/workroom costs % is expressed as % of NS).
1. Complete the following data taken from the condensed income statements for merchandising Companies X, Y, and Z. Enter net loss with a minus sign. Company X Company Y Company Z Net income/(net loss) $250 $fill in the blank 1 $(50) Sales fill in the blank 2 1,250 930 Gross profit 425 fill in the blank 3 495 Operating expenses fill in the blank 4 550 fill in the blank 5 Cost of goods sold 390 720 fill in the blank 6 2. A corporation has 50,000 shares of $25 par stock outstanding. If the corporation issues a 3-for-1 stock split, the number of shares outstanding after the split will be 3. Baker Green's weekly gross earnings for the week ending December 7 were $2,000, and her federal income tax withholding was $240. Assuming the social security rate is 6% and Medicare is 1.5%, and all earnings are subject to FICA taxes, what is Green's net pay? Round your answer to the nearest whole dollar. 4. The supplies account had a beginning balance of $1,669. Supplies purchased…
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.