Ignore the impact of income taxes in your calculation, Accounting Basics

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Ignore the impact of income taxes in your calculation

Retail co. has two dept's, indoor and outdoor. The co.'s most recent monthly contribution format income statement is below:

Sales: 4,900,000 1,500,000 3,400,000
Variable Exp's: 2,200,000 800,000 1,400,000
Contribution Margin: 2,700,000 700,000 2,000,000
Fixed Exp's: 2,400,000 800,000 1,600,000

Net Operating Income (loss) 300,000 (100,000) 400,000

A study indicates that $400,000 of the fixed exp's being charged to the Outdoor dept are sunk costs ,or allocated costs that will continue even if the Outdoor dept is dropped. In addition, the elimination of the Outdoor dept. would result ina 10% decrease in the sales of the Indoor department.

Ignore the impact of income taxes in your calculation.If the Outdoor Department is dropped what will be the effect on the net operating income of the company as a whole?

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Accounting Basics: Ignore the impact of income taxes in your calculation

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Accounting Basics: Ignore the impact of income taxes in your calculation

Reference No:- TGS0707404

Have a Question? (oR Write a Review)

Recent Questions Asked Accounting Basics

Q : What is the balance in estimated warranty payable

Q : What is the costs of that activity pool

Q : How wilkes revenues and expenses for december

Q : Briefly explain why the cash received from customers

Q : Ignore the impact of income taxes in your calculation

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Request for Solution File

Ask an Expert for Answer!!

Accounting Basics: Ignore the impact of income taxes in your calculation

Reference No:- TGS0707404

Recent Questions Asked Accounting Basics

Q : What is the balance in estimated warranty payable

Q : What is the costs of that activity pool

Q : How wilkes revenues and expenses for december

Q : Briefly explain why the cash received from customers

Q : Ignore the impact of income taxes in your calculation

Q : Explain the contemporary designs accounting records

Q : Identify which accounts affected by the journal entries

Q : Decision to buy the parts from the outside

Q : What steps could the management of bci take

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