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  3. the most recent monthly income statement for sun s

The most recent monthly income statement for Sun Shine Corporation is given below: ...

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Question

Accounting

  1. The most recent monthly income statement for Sun Shine Corporation is given below:

Total

Store A

Store B

Sales

$1,000,000

$400,000

$600,000

Variable expenses

580,000

160,000

420,000

Contribution margin

420,000

240,000

180,000

Traceable fixed expenses

300,000

100,000

200,000

Store segment margin

120,000

140,000

(20,000)

Common fixed expenses

50,000

20,000

30,000

Net operating income

$70,000

$120,000

$(50,000)

Due to its poor showing, consideration is being given to closing Store B. Studies show that if Store B is closed, one fourth of its traceable fixed expenses will continue unchanged. The studies also show that closing Store B would result in a 10 percent decrease in sales in Store A. The company allocates common fixed expenses to the stores on the basis of sales dollars.

Required:

Determine the monthly financial advantage (disadvantage) of closing Store B. (Provide side by side comparison calculations)

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