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Martinez Corporation runs two convenience stores, one in Connecticut and one in Rhode Island. Operating income for each store in 2017 is as follows: O (Click the icon to view the add-or-drop segments information.) |(Click to view the operating income for the stores.) Read the reguirements Requirement 1. By closing down the Rhode Island store, Martinez can reduce overall corporate overhead costs by $41,000. Calculate Martinez's operating income if it closes the Rhode Island store. Is Maria Lopez's statement about the effect of closing the Rhode Island store correct? Explain. Begin by calculating Martinez's operating income if it closes the Rhode Island store. (Complete all ans parentheses or a minus sign.) - X X et effect is an operating loss enter the amount with Data table (Loss in Revenues) Savings in Costs Rhode Island Store Connecticut Store Revenues $ 1,040,000 S 820.000 Revenues Operating costs Operating costs Cost of goods sold Cost of goods sold 760,000 620,000 Lease rent (renewable each year) 88,000 75,000 Lease rent (renewable each year) Labor costs (paid on an hourly basis) Labor costs (paid on an hourly basis) Depreciation of equipment 48,000 37,000 Utilities (electricity, heating) Depreciation of equipment 27,000 18,000 Corporate overhead Utilities (electricity, heating) 44,000 52,000 46,000 38,000 Total operating costs Allocated corporate overhead 1,013,000 840,000 Effect on operating income (loss) Total operating costs 27,000 $ (20,000) Operating income (loss)

Martinez Corporation runs two convenience stores, one in Connecticut and one in Rhode Island. Operating income for each store in 2017 is as follows: O (Click the icon to view the add-or-drop segments information.) |(Click to view the operating income for the stores.) Read the reguirements Requirement 1. By closing down the Rhode Island store, Martinez can reduce overall corporate overhead costs by $41,000. Calculate Martinez's operating income if it closes the Rhode Island store. Is Maria Lopez's statement about the effect of closing the Rhode Island store correct? Explain. Begin by calculating Martinez's operating income if it closes the Rhode Island store. (Complete all ans parentheses or a minus sign.) - X X et effect is an operating loss enter the amount with Data table (Loss in Revenues) Savings in Costs Rhode Island Store Connecticut Store Revenues $ 1,040,000 S 820.000 Revenues Operating costs Operating costs Cost of goods sold Cost of goods sold 760,000 620,000 Lease rent (renewable each year) 88,000 75,000 Lease rent (renewable each year) Labor costs (paid on an hourly basis) Labor costs (paid on an hourly basis) Depreciation of equipment 48,000 37,000 Utilities (electricity, heating) Depreciation of equipment 27,000 18,000 Corporate overhead Utilities (electricity, heating) 44,000 52,000 46,000 38,000 Total operating costs Allocated corporate overhead 1,013,000 840,000 Effect on operating income (loss) Total operating costs 27,000 $ (20,000) Operating income (loss)

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter10: Short-term Decision Making
Section: Chapter Questions
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Martinez Corporation runs two convenience stores, one in Connecticut and one in Rhode Island. Operating income for each store in 2017 is as follows: A (Click the icon to view the add-or-drop segments information.) (Click to view the operating income for the stores.) Read the requirements . Requirement 1. By closing down the Rhode Island store, Martinez can reduce overall corporate overhead costs by S41,000. Calculate Martinez's operating income if it closes the Rhode Island store. Is Maria Lopez's statement about the effect of closing the Rhode Island store correct? Explain. - X Begin by calculating Martinez's operating income if it closes the Rhode Island store. (Complete all ans parentheses or a minus sign.) let effect is an operating loss enter the amount with Data table (Loss in Revenues) Savings in Costs Connecticut Rhode Island Store Store Revenues Revenues 1,040,000 $ 820,000 Operating costs Operating costs Cost of goods sold Cost of goods sold 760,000 620,000 Lease rent (renewable each year) Lease rent (renewable each year) 88,000 75,000 Labor costs (paid on an hourly basis) Labor costs (paid on an hourly basis) Depreciation of equipment 48,000 37,000 Utilities (electricity, heating) Depreciation of equipment 27,000 18,000 Corporate overhead Utilities (electricity, heating) 44,000 52,000 46,000 38,000 Total operating costs Allocated corporate overhead 1,013,000 840,000 Effect on operating income (loss) Total operating costs 27,000 S (20,000) Operating income (loss)
Transcribed Image Text:Martinez Corporation runs two convenience stores, one in Connecticut and one in Rhode Island. Operating income for each store in 2017 is as follows: A (Click the icon to view the add-or-drop segments information.) (Click to view the operating income for the stores.) Read the requirements . Requirement 1. By closing down the Rhode Island store, Martinez can reduce overall corporate overhead costs by S41,000. Calculate Martinez's operating income if it closes the Rhode Island store. Is Maria Lopez's statement about the effect of closing the Rhode Island store correct? Explain. - X Begin by calculating Martinez's operating income if it closes the Rhode Island store. (Complete all ans parentheses or a minus sign.) let effect is an operating loss enter the amount with Data table (Loss in Revenues) Savings in Costs Connecticut Rhode Island Store Store Revenues Revenues 1,040,000 $ 820,000 Operating costs Operating costs Cost of goods sold Cost of goods sold 760,000 620,000 Lease rent (renewable each year) Lease rent (renewable each year) 88,000 75,000 Labor costs (paid on an hourly basis) Labor costs (paid on an hourly basis) Depreciation of equipment 48,000 37,000 Utilities (electricity, heating) Depreciation of equipment 27,000 18,000 Corporate overhead Utilities (electricity, heating) 44,000 52,000 46,000 38,000 Total operating costs Allocated corporate overhead 1,013,000 840,000 Effect on operating income (loss) Total operating costs 27,000 S (20,000) Operating income (loss)
Martinez Corporation runs two convenience stores, one in Connecticut and one in Rhode Island. Operating income for each store in 2017 is as follows: E (Click to view the operating income for the stores.) 1 (Click the icon to view the add-or-drop segments information.) Read the reguirements of closing the Requireme Rhode Isla $41 - X Requirements More info Enter Begin by c parenthese he amount with The equipment has a zero disposal value. In a senior management meeting, Maria Lopez, the management accountant at Martinez Corporation, makes the following comment, "Martinez can increase its profitability by closing down the Rhode Island store or by adding another store like it. 1. By closing down the Rhode Island store, Martinez can reduce overall corporate overhead costs by $41,000. Calculate Martinez's operating income if it closes the Rhode Island store. Is Maria Lopez's statement about the effect of closing the Rhode Island store correct? Explain. 2. Calculate Martinez's operating income if it keeps the Rhode Island store open and opens another store with revenues and costs identical to the Rhode Island store (including a cost of $18,000 to acquire equipment with a one-year useful life and zero disposal value). Opening this store will increase corporate overhead costs by $2,000. Is Maria Lopez's statement about the effect of adding another store like the Rhode Island store correct? Explain. Revenues Operating Cost o Lease Print Done Labor Depred Print Done Utilities (electricity, heating) Corporate overhead Total operating costs Effect on operating income (loss)
Transcribed Image Text:Martinez Corporation runs two convenience stores, one in Connecticut and one in Rhode Island. Operating income for each store in 2017 is as follows: E (Click to view the operating income for the stores.) 1 (Click the icon to view the add-or-drop segments information.) Read the reguirements of closing the Requireme Rhode Isla $41 - X Requirements More info Enter Begin by c parenthese he amount with The equipment has a zero disposal value. In a senior management meeting, Maria Lopez, the management accountant at Martinez Corporation, makes the following comment, "Martinez can increase its profitability by closing down the Rhode Island store or by adding another store like it. 1. By closing down the Rhode Island store, Martinez can reduce overall corporate overhead costs by $41,000. Calculate Martinez's operating income if it closes the Rhode Island store. Is Maria Lopez's statement about the effect of closing the Rhode Island store correct? Explain. 2. Calculate Martinez's operating income if it keeps the Rhode Island store open and opens another store with revenues and costs identical to the Rhode Island store (including a cost of $18,000 to acquire equipment with a one-year useful life and zero disposal value). Opening this store will increase corporate overhead costs by $2,000. Is Maria Lopez's statement about the effect of adding another store like the Rhode Island store correct? Explain. Revenues Operating Cost o Lease Print Done Labor Depred Print Done Utilities (electricity, heating) Corporate overhead Total operating costs Effect on operating income (loss)
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