Segment data for Felicia’s Fast Food Restaurants for the current year appears below: Cajun Japanese Brazilian Total Sales $60,000 $100,000 $40,000 $200,000 Cost of goods sold 36,000 65,000 20,000 121,000 Contribution margin 24,000 35,000 20,000 79,000 Manager salaries 18,000 21,000 8,000 47,000 Rent 2,000 1,000 3,000 6,000 Segment margin $4,000 $13,000 $9.000 $26,000 Common fixed costs 7,000 7,000 7,000 21,000 Profit $ (3,000) $ 6,000 $ 2,000 $ 5,000 Managers salaries and rent for the particular restaurant will not continue if closed. If the Cajun restaurant is closed, what would be the effect on total company profits?
Segment data for Felicia’s Fast Food Restaurants for the current year appears below: Cajun Japanese Brazilian Total Sales $60,000 $100,000 $40,000 $200,000 Cost of goods sold 36,000 65,000 20,000 121,000 Contribution margin 24,000 35,000 20,000 79,000 Manager salaries 18,000 21,000 8,000 47,000 Rent 2,000 1,000 3,000 6,000 Segment margin $4,000 $13,000 $9.000 $26,000 Common fixed costs 7,000 7,000 7,000 21,000 Profit $ (3,000) $ 6,000 $ 2,000 $ 5,000 Managers salaries and rent for the particular restaurant will not continue if closed. If the Cajun restaurant is closed, what would be the effect on total company profits?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Segment data for Felicia’s Fast Food Restaurants for the current year appears below:
| Cajun | Japanese | Brazilian | Total | ||||
| Sales | $60,000 | $100,000 | $40,000 | $200,000 | |||
| Cost of goods sold | 36,000 | 65,000 | 20,000 | 121,000 | |||
| Contribution margin | 24,000 | 35,000 | 20,000 | 79,000 | |||
| Manager salaries | 18,000 | 21,000 | 8,000 | 47,000 | |||
| Rent | 2,000 | 1,000 | 3,000 | 6,000 | |||
| Segment margin | $4,000 | $13,000 | $9.000 | $26,000 | |||
| Common fixed costs | 7,000 | 7,000 | 7,000 | 21,000 | |||
| Profit | $ (3,000) | $ 6,000 | $ 2,000 | $ 5,000 |
Managers salaries and rent for the particular restaurant will not continue if closed. If the Cajun restaurant is closed, what would be the effect on total company profits?
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