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bagirrra123 [75]
3 years ago
9

Top management of Drexel-Hall is considering closing Store 3. The three stores are close enough together that management estimat

es closing Store 3 would cause sales at Store 1 to increase by $60,000, and sales at Store 2 to increase by $120,000. Closing Store 3 is not expected to cause any change in common fixed costs. Compute the increase or decrease that closing Store 3 should cause in: a. Total monthly sales for Drexel-Hall stores. b. The monthly responsibility margin of Stores 1 and 2. c. The company’s monthly income from operations. Williams, Jan. Financial & Managerial Accounting (p. 980). McGraw-Hill Higher Education. Kindle Edition.

Business
1 answer:
Zarrin [17]3 years ago
4 0

Answer:

Compute the increase or decrease that closing Store 3 should cause in: a. Total monthly sales for Drexel-Hall stores.

  • total monthly sales should decrease from $1,800,000 to $1,380,000 = a $420,000 reduction

b. The monthly responsibility margin of Stores 1 and 2.

  • store 1 responsibility margin increased from 10% to 12.55% (2.55% increase)
  • store 2 responsibility margin increased from 9% to 13.69% (4.69% increase)

c. The company’s monthly income from operations.

  • increased from $72,000 to $140,200 ($70,200 increase)

Explanation:

                                                Store                 Store                Total                                          

                                                   1                         2

Sales                                         $660,000          $720,000     $1,380,000

Variable costs                          $409,200          $453,600        $862,800

Contribution margin                $250,800          $266,400         $517,200

Controllable fixed costs           $120,000          $102,000        $222,000

Performance margin                $130,800           $164,600        $292,200

Committed fixed costs              $48,000            $66,000         $114,000

Store responsibility margin      $82,800             $98,600        $178,200

Common fixed costs                                                                    $38,000

Income from operations                                                             $140,200

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Answer:

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Explanation:

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3 years ago
Oriole’s Electronic Repair Shop started the year with total assets of $300000 and total liabilities of $208000. During the year,
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Answer:

$154,700

Explanation:

The computation of the change in amount is shown below

But before that first find out the ending capital balance which is

= (Total assets - total liabilities) + (revenues - expenses) - drawings

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= $92,000 + $204,000 - $49,300

= $92,000 + $154,700

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Now the change in capital balance is

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if the company chooses the lease option, it will have to pay an immediate deposit of 25000 to cover any future damages to the eq
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Answer:

The answer is "68,788".

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Net cash flow present value = immediate deposit + Annual lease payment present value

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Net cash flow present value = 78838-10050 = 68788

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3 years ago
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OleMash [197]

Answer:

31.12

Explanation:

Given that,

Growing at a constant rate = 6.5%

Firm’s last dividend, R = 3.36

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