Hme improvement company a retail home store has two major

Reference no: EM13600199

Home Improvement Company, a retail home store, has two major divisions-outdoors and indoors. Here is the data on their income and expenses: Total Indoor Outdoor Sales $85,000 $50,000 $35,000 Variable expenses 35,000 15,000 20,000 Contribution margin 50,000 35,000 15,000 Fixed expenses: Advertising 5,000 2,000 3,000 Supervisor salaries 19,000 10,000 9,000 Store insurance 2,000 1,000 1,000 General administrative 11,000 8,000 3,000 overhead Total fixed expenses 37,000 21,000 16,000 Net operating income (loss) $13,000 $14,000 (1,000) Due to the loss, the general manager is considering closing the outdoor division and just focusing on the indoor division. If the division were closed, the supervisor salary and the advertising costs could be eliminated. Should the division be closed? Please show your computations to support your answer.

Reference no: EM13600199

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