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CoursHeroTranscribedText: .III Metro by TMobile '5' 11:25 PM 418%CJ' ezto.mheducation.com 2 . Award: 6.00 points Betty's Fashions operates retail stores in both downtown and suburban locations. The company has two responsibility centers: the City Division, which contains stores in downtown locations, and the Mall Division, which contains stores in suburban locations. Betty's CEO is concerned about the profitability of the City Division, which has been operating at a loss for the last several years. The most recent City Division income statement follows. The CEO has asked for your advice on shutting down the City Division's operations. If the City Division is eliminated, corporate administration is not expected to change, nor are any other changes expected in the operations or costs of the Mall Division. BETTY'S FASHIONS, CITY DIVISION Divisional Income Statement For the Year Ending January 31 Sales revenue $ 6,200,000 Costs AdvertisingCity Division 194,000 Cost of goods sold 4,050,000 Divisional administrative salaries 309,000 Selling costs (sales commissions) 599,000 Rent 754,000 Share of corporate administration 494,000 Total costs $ 6,400,000 Net loss before income tax benet 5 (200,000) Tax benet at 40% rate 80,000 Net loss 5 (120000) Req u I red : a. Using the worksheet below, determine which revenues and costs are probably differential for the decision to discontinue City Division's operations. :1. What will be the effect on Betty's profits if the division is eliminated? Complete this question by entering your answers in the tabs below. Required A Required B Using the worksheet below, determine which revenues and costs are probably differential for the decision to discontinue City Division's operations. Show lma Sales revenue Costs Advertising - City division Cost of goods sold Divisional administrative salaries Selling costs (sales commissions) Share of corporate administration Required 3 )

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