BUS 616 Spring, 2016 Assignment #3-Suffolk, Inc. operates a chain of high-end home furnishing stores
Question # 00206549
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Updated on: 02/26/2016 01:08 AM Due on: 03/27/2016
BUS 616
Spring, 2016
Assignment #3
Place each part on a separate tab. Submit one excel file using the naming convention lastname.firstname.A3
Suffolk, Inc. operates a chain of high-end home furnishing stores. Income statement for Central Division for the most recent year is as follows:
Sales
COGS
Gross Margin
31,426,500
16,341,780
15,084,720
Selling Expense:
Commissions
Advertising
Marketing admin
3,142,650
2,028,020
138,516
Store Expense:
Occupancy
Admin salaries
Sales salaries
Depreciation
Miscellaneous
1,075,305
2,616,323
1,855,144
186,520
42,605
Central Div Expense:
Salaries
Occupancy
Other
General
328,470
73,423
36,598
2,514,120
Expenses
Net Income
14,037,694
1,047,026
Sales commissions are paid at the same rate on all sales. "Central Division Expense" consists of costs directly related to operating the division headquarters, except
that "general" expense consists of corporate headquarters costs allocated among the divisions based on sales.
Part 1
25 points
Corporate headquarters also prepares income statements for each individual store. The Kansas City store is one of twelve stores in Central Division.
Sales for the KC store were $2,685,500. The store's gross margin percentage is 4 percentage points lower than the division as a whole.
Company policy is to allocate advertising/marketing costs of the division equally among the stores in the division.
Store expenses are all directly traceable to stores. The amounts for the KC store are:
Occupancy
86,436
Admin salaries
241,600
Sales salaries
136,250
Depreciation
22,200
Miscellaneous
4,623
Central division expenses, including general, are allocated to stores based on sales.
Prepare an income statement for the Kansas City store based on the above data and instructions.
Part 2
35 points
Because the Kansas City store appears to have poor profit performance, headquarters is considering closing the store.
Determine the actual profit/loss contribution of the store to the corporation, showing any necessary calculations.
Advertising costs of $55,725 related directly to the KC market.
Would you recommend closing the store? Explain.
Spring, 2016
Assignment #3
Place each part on a separate tab. Submit one excel file using the naming convention lastname.firstname.A3
Suffolk, Inc. operates a chain of high-end home furnishing stores. Income statement for Central Division for the most recent year is as follows:
Sales
COGS
Gross Margin
31,426,500
16,341,780
15,084,720
Selling Expense:
Commissions
Advertising
Marketing admin
3,142,650
2,028,020
138,516
Store Expense:
Occupancy
Admin salaries
Sales salaries
Depreciation
Miscellaneous
1,075,305
2,616,323
1,855,144
186,520
42,605
Central Div Expense:
Salaries
Occupancy
Other
General
328,470
73,423
36,598
2,514,120
Expenses
Net Income
14,037,694
1,047,026
Sales commissions are paid at the same rate on all sales. "Central Division Expense" consists of costs directly related to operating the division headquarters, except
that "general" expense consists of corporate headquarters costs allocated among the divisions based on sales.
Part 1
25 points
Corporate headquarters also prepares income statements for each individual store. The Kansas City store is one of twelve stores in Central Division.
Sales for the KC store were $2,685,500. The store's gross margin percentage is 4 percentage points lower than the division as a whole.
Company policy is to allocate advertising/marketing costs of the division equally among the stores in the division.
Store expenses are all directly traceable to stores. The amounts for the KC store are:
Occupancy
86,436
Admin salaries
241,600
Sales salaries
136,250
Depreciation
22,200
Miscellaneous
4,623
Central division expenses, including general, are allocated to stores based on sales.
Prepare an income statement for the Kansas City store based on the above data and instructions.
Part 2
35 points
Because the Kansas City store appears to have poor profit performance, headquarters is considering closing the store.
Determine the actual profit/loss contribution of the store to the corporation, showing any necessary calculations.
Advertising costs of $55,725 related directly to the KC market.
Would you recommend closing the store? Explain.
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Rating:
/5
Solution: BUS 616 Spring, 2016 Assignment #3-Suffolk, Inc. operates a chain of high-end home furnishing stores