a. Calculate the children's department's contribution to profit. Determine whether to eliminate the children's department. b. Confirm the conclusion you reached in Requirement a by preparing income statements for the company as a whole with and without the children's department. c. Eliminating the children's department would increase space available to display men's and women's boots. Suppose management estimates that a wider selection of adult boots would increase the store's net earnings by $48,000. Would this information affect the decision that you made in Requirement a?

a. Calculate the children's department's contribution to profit. Determine whether to eliminate the children's department. b. Confirm the conclusion you reached in Requirement a by preparing income statements for the company as a whole with and without the children's department. c. Eliminating the children's department would increase space available to display men's and women's boots. Suppose management estimates that a wider selection of adult boots would increase the store's net earnings by $48,000. Would this information affect the decision that you made in Requirement a?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Fanning Boot Company sells men's, women's, and children's boots. For each type of boot sold, It operates a separate department that has its own manager. The manager of the men's department has a sales staff of nine employees, the manager of the women's department has six employees, and the manager of the children's department has three employees. All departments are housed in a single store. In recent years, the children's department has operated at a net loss and is expected to continue to do so. Last year's Income statements follow. Sales Cost of goods sold. Gross margin Department manager's salary Sales commissions Rent on store lease Store utilities Net income (loss) Req A Req B Men's Department $ 650,000 (268,000) 382,000 (57,000) (111,200) (26,000) (9,000) $ 178,800 Req C Complete this question by entering your answers in the tabs below. Women's Department $ 470,000 Contribution to profit (loss) Should the children's department be eliminated? (178,400) 291,600 (46,000) (80,600)…
HARDA Fashion sells ready-to-wear fashion clothes to teenagers. The company has a 20-store chain concentrated in the north-eastern part of the United States of America. Each store has the experienced full-time staff consist of a manager and an assistant manager. The full-time staff is paid a fixed salary. The full-time staff is assisted with a cashier and a sales assistant who have comparatively less experience. The cashier and sales assistant are paid hourly wages plus the commission based on the volume of sales. HARDA Fashion uses unsophisticated cash registered with four-parts sales invoice to record each financial transaction. These sales invoices for the sales transaction irrespective of the payment type.The record-keeping starts with the sales assistant on the sales floor. The sales assistant fills the sales invoices manually by providing the following information: Records his or her employee number.2. Enters the transaction details including clothes item number, description,…
HARDA Fashion sells ready-to-wear fashion clothes to teenagers. The company has a 20-store chain concentrated in the north-eastern part of the United States of America. Each store has the experienced full-time staff consist of a manager and an assistant manager. The full-time staff is paid a fixed salary. The full-time staff is assisted with a cashier and a sales assistant who have comparatively less experience. The cashier and sales assistant are paid hourly wages plus the commission based on the volume of sales. HARDA Fashion uses unsophisticated cash registered with four-parts sales invoice to record each financial transaction. These sales invoices for the sales transaction irrespective of the payment type.The record-keeping starts with the sales assistant on the sales floor. The sales assistant fills the sales invoices manually by providing the following information: Records his or her employee number.2. Enters the transaction details including clothes item number, description,…
HARDA Fashion sells ready-to-wear fashion clothes to teenagers. The company has a 20-store chain concentrated in the north-eastern part of the United States of America. Each store has the experienced full-time staff consist of a manager and an assistant manager. The full-time staff is paid a fixed salary. The full-time staff is assisted with a cashier and a sales assistant who have comparatively less experience. The cashier and sales assistant are paid hourly wages plus the commission based on the volume of sales. HARDA Fashion uses unsophisticated cash registered with four-parts sales invoice to record each financial transaction. These sales invoices for the sales transaction irrespective of the payment type. The record-keeping starts with the sales assistant on the sales floor. The sales assistant fills the sales invoices manually by providing the following information: 1. Records his or her employee number. 2. Enters the transaction details including clothes item number,…
HARDA Fashion sells ready-to-wear fashion clothes to teenagers. The company has a 20-store chain concentrated in the north-eastern part of the United States of America. Each store has the experienced full-time staff consist of a manager and an assistant manager. The full-time staff is paid a fixed salary. The full-time staff is assisted with a cashier and a sales assistant who have comparatively less experience. The cashier and sales assistant are paid hourly wages plus the commission based on the volume of sales. HARDA Fashion uses unsophisticated cash registered with four-parts sales invoice to record each financial transaction. These sales invoices for the sales transaction irrespective of the payment type.The record-keeping starts with the sales assistant on the sales floor. The sales assistant fills the sales invoices manually by providing the following information: Records his or her employee number.2. Enters the transaction details including clothes item number, description,…
Bebe Co is a small company that manufactures and sells high-quality.blouses. Its customers are mainly fashion boutiques. Bebe Co has two directors, one of who is non-executive. The other is involved in the day-to-day administration of the company. There are ten other employees. Six of these work in the factory, one works in the warehouse, one is a sales representative and two are accounts staff. The accounts staff consist of Miss Ines, who is responsible for processing sales and receivables, and Mrs. Evie, who is the purchases and wages clerk. Mrs. Evie works part-time, five mornings a week. The company's sales representative visits shops throughout the region. He takes orders from customers which he records on a pre-numbered two-part order form. He passes the completed forms to the accounts department. Miss Ines files one copy of the order form in numerical sequence and passes the other to the warehouse. The completed order is dispatched from the warehouse by the carrier,…
Happlia Co. imports household appliances. Each model has many variations and each unit has an identificationnumber. Happlia pays all costs for getting the goods from the port to its central warehouse in Des Moines. Afterrepackaging, the goods are consigned to retailers. A retailer makes a sale, simultaneously buys the appliance fromHapplia, and pays the balance due within one week.To alleviate the overstocking of refrigerators at a Minneapolis retailer, some were reshipped to a Kansas Cityretailer where they were still held in inventory at December 31, 2018. Happlia paid the costs of this reshipment.Happlia uses the specific identification inventory costing method.Required:1. In regard to the specific identification inventory costing method:a. Describe its key elements.b. Discuss why it is appropriate for Happlia to use this method.2. a. What general criteria should Happlia use to determine inventory carrying amounts at December 31, 2018?b. Give four examples of costs included in these…
Bebe Co is a small company which manufactures and sells high quality blouse. Its customers are mainly fashion boutiques. Bebe Co has two directors, one of who is non-executive. The other is involved in the day-to-day administration of the company. There are ten other employees. Six of these work in the factory, one works in the warehouse, one is a sales representative and two are accounts staff. The accounts staff consist of Miss Ines, who is responsible for processing sales and receivables, and Mrs. Evie, who is the purchases and wages clerk. Mrs. Evie works part-time, five mornings a week. The company’s sales representative visits shops throughout the region. He takes orders from customers which he records on a pre-numbered two-part order form. He passes the completed forms to the accounts department. Miss Ines files one copy of the order form in numerical sequence and passes the other to the warehouse. The completed order is dispatched from the warehouse by carrier, accompanied…
Happlia Co. imports household appliances. Each model has many variations and each unit has an identification number. Happlia pays all costs for getting the goods from the port to its central warehouse in Des Moines. After repackaging, the goods are consigned to retailers. A retailer makes a sale, simultaneously buys the appliance from Happlia, and pays the balance due within one week. To alleviate the overstocking of refrigerators at a Minneapolis retailer, some were reshipped to a Kansas City retailer where they were still held in inventory at December 31, 2016. Happlia paid the costs of this reshipment. Happlia uses the specific identification inventory costing method. Required: 1. In regard to the specific identification inventory costing method: a. Describe its key elements. b. Discuss why it is appropriate for Happlia to use this method. 2. a. What general criteria should Happlia use to determine inventory carrying amounts at December 31, 2016? b. Give four examples of costs…
Ecovacs is a small company which manufactures and sells high quality knitwear. Its customers are mainly fashion boutiques. Ecovacs has two directors, one who is non-executive and the other who is involved in the day-to-day administration of the company. There are ten other employees. Six of these work in the factory, one works in the warehouse, one is a sales representative and two are accounts staff. The accounts staff consist of Miss Jones, who is responsible for processing sales and receivables, and Mrs. Singh, who is the purchases and wages clerk. Mrs. Singh works part-time, five mornings a week. The company’s sales representative visits shops throughout the region. He takes orders from customers which he records on a pre-numbered two-part order form. He passes the completed forms to the accounts department. Miss Jones files one copy of the order form in numerical sequence and passes the other to the warehouse. The completed order is dispatched from the warehouse by carrier,…
Meadow Logistics, Incorporated (MLI) distributes food purchased in bulk to small retailers. The firm is divided into two divisions: Purchasing and Distribution. Purchasing is responsible for ordering goods from the manufacturer, receiving them, and then moving them to the appropriate location in the warehouse. Distribution is responsible for taking orders from retailers, picking the products from the warehouse for the orders, and packaging the orders for shipment. MLI has a policy of filling every order on the day of the order. If the firm is out of a particular item, it will ship a partial order and complete the order when the item is back in stock. Occasionally, an order will not have to be packaged if the retailer chooses to take delivery at the MLI loading dock. Distribution has 20 employees who are responsible for the activities, and all 20 are trained to handle any of the three tasks. Each of these employees works 40 hours per week for 50 weeks. There is an allowance of 18…
chil has its own manager. The manager of the men's department has a sales staff of nine employees, the manager of the women's department has six employees, and the manager of the children's department has three employees. All departments are housed in a single store. In recent years, the children's department has operated at a net loss and is expected to continue to do so. Last year's income statements follow. en's boots. For each type of boot sold, it operates a separate department that Sales Cost of goods sold Gross margin Department manager's salary Sales commissions Rent on store lease Store utilities Net income (loss) es Required Men's Department $ 690,000 (275,000) Women's Department Children's Department $ 490,000 $ 230,000 (184,000) (106,375) 415,000 306,000 123,625 (71,000) (60,000) (40,000) (125,200) (94,600) (37,400) (40,000) (40,000) (40,000) (23,000) (23,000) (23,000) $ 155,800 $ 88,400 $ (16,775) a. Calculate the children's department's contribution to profit. Determine…