Solution-Calculate profitability of Flare Fashions three

Calculate profitability of Flare Fashions three departments

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Question - Flare Fashions is a clothing store that has three departments: men's, women's and children's clothing. Sales and variable costs for each department are shown below. In addition, each department has its own fixed costs for staffing and takes a one-third (1/3) share of rental and management costs for the clothing store as a whole (as shown in the table below).

	Men's	Women's	Children's
Sales	$175,000	$280,000	$115,000
Variable costs as a percentage of department sales	45%	53%	49%
Departmental fixed costs	$50,000	$55,000	$35,000
Department's portion of shared fixed costs	$35,000	$35,000	$35,000

Required -

a. Calculate the profitability of Flare Fashions' three departments.

b. Management is considering shutting down one or more of Flare Fashions' departments, and would like your advice. What recommendations can you provide management?

Reference no: EM133033071

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Calculate profitability of Flare Fashions three departments

Reference no: EM133033071

Reference no: EM133033071

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