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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Many fast-food restaurant chains such as McDonald's occasionally discontinue restaurants in their system. What are some financial considerations in deciding to eliminate a store?

To determine

Discontinuation of a Segment or Product: Often a product, a store or a segment of business is discontinued by the business, when it causes loss. This leads to the elimination of all the variable cost associated with the product or the segment of business.

To Explain: The financial considerations in deciding to eliminate a store.

Explanation

Company MD a fast-food restaurant chain, occasionally discontinues restaurants in the system. Below discussed are the financial considerations made by the Company MD while deciding to eliminate a store.

  • The profitability of the store must be considered. The differential income of the store over a period of time should be considered...

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