Compute the effect on retail sales, Financial Accounting

Assignment Help:

Molina Medical Supply Company is trying to decide whether or not to continue distributing hospital supplies. The following information is available for Molina's business segments. Assume that all direct fixed costs could be avoided if a segment is dropped and that the total common fixed costs would remain unchanged if a segment is dropped. Hospital Supplies retail Stores Mail Order 
Sales $120,000 $440,000 $360,000
Variable Costs 64,000 200,000 140,000
Contribution Margin 56,000 240,000 220,000
Direct Fixed Costs 50,000 80,000 90,000
Allocated Common Fixed Costs 20,000 70,000 60,000
Net Income $14,000 $90,000 $70,000
Assume that if hospital supplies were dropped, retail store sales would increase by 25%. What would the impact of the increase in retail store sales have on overall profitability (compute the effect on retail sales only)?
A Income would increase by $105,000
B Income would increase by $22,500
C Income would increase by $40,000
D Income would increase by $60,000


Related Discussions:- Compute the effect on retail sales

Revenue recognition, Revenue recognition is a joint project of financial ac...

Revenue recognition is a joint project of financial accounting standard board and international accounting standard board.1.identify the roles and objectives of FASB and IASB?.2. W

EPS, Do you help with assignments

Do you help with assignments?

Accumulation accounts for minors-trusts laws, ACCUMULATION ACCOUNTS FOR MIN...

ACCUMULATION ACCOUNTS FOR MINORS   (a) Income accumulations : When property is left in trust for minors, the income earned for the period will be divided equally or according t

Relationship between cash or call asset-or-nothing, Options with discontinu...

Options with discontinuous payoffs are called Binary options. An example is the cash-or-nothing callwhich pays nothing if the stock price at the maturity of the option is below the

State the benefits of accounting information, State the Benefits of account...

State the Benefits of accounting information Benefits of accounting information ultimately decline. Cost of providing information, though, will rise with every additional piec

It''s been two months since you took a position, It’s been two months since...

It’s been two months since you took a position as an assistant financial analyst at Caledonia Products. Although your boss has been pleased with your work, he is still a bit hesita

What is the journal entry to record the first interest, On January 1, 2010,...

On January 1, 2010, Jacob issues $800,000 of 9%, 13-year bonds at a price of 96½. Six years later, on January 1, 2016, Jacob retires 20% of these bonds by buying them on the open m

Types of gift by way of a will-executorship laws and account, TYPES OF GIFT...

TYPES OF GIFT BY WAY OF A WILL (a) A special (or specific) legacy is a testamentary gift of a particular part of the property of the testator, which identifies that part by a s

Define about financial gearing, Q. Define about financial gearing? As f...

Q. Define about financial gearing? As financial gearing raise the burden of interest payments increases and earnings become more volatile. Since interest payments should be met

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd