Chapter 4 Relevant Cost Examples

Chapter 4 Relevant Cost Examples - ACIS 2116 Chapter Four...

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ACIS 2116 Chapter Four – Relevant Cost Examples Cost Behavior and Relevant Costs
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2 KC Retailing, Inc. operates several stores. Two of these stores have incurred net losses for the past 3 years. Following is income statement information for one of the stores: Store A Store B Sales $600,000 $500,000 Cost of Sales $350,000 $280,000 Gross margin $250,000 $220,000 Rent $40,000 $35,000 Local $130,000 $185,000 Corporate $90,000 $90,000 Net Income ($10,000) ($90,000)
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3 If a store is closed, the corporate selling and administrative expenses are allocated to the other stores. All the other expenses are specific to the store and are eliminated. Store A Store B Sales $600,000 $500,000 Cost of Sales $350,000 $280,000 Gross margin $250,000 $220,000 Rent $40,000 $35,000 Local $130,000 $185,000 Corporate $90,000 $90,000 Net Income ($10,000) ($90,000)
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Chapter 4 Relevant Cost Examples - ACIS 2116 Chapter Four...

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