Answer:
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.
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