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Student Name: Marcie DeGiovine Class: BA511 6/41 - 9/30/13 Problem 13-18 THRIFTY MARKERS, INC.

Schedule Gross margin lost if the store is closed Less costs which can be avoided: Direct advertising Sales salaries Delivery salaries Store rent Store management salaries General office salaries Utilities Insurance on inventories Employment taxes* Decrease in company net operating income if the Downtown Store is closed *Salaries avoided by closing store: Sales salaries Delivery salaries Store management salaries General office salaries Total salaries Employment tax rate Employment taxes avoided ( 3.) Computations: Gross margin lost if the store is closed Gross margin gained at the Uptown Store Net loss in gross margin Less avoidable costs if Downtown is closed Net advantage of closing Downtown Store ($228,000) $36,000 45,000 7,000 65,000 15,000 8,000 27,200 6,000 9,000

218,200 ($9,800) Correct!

$45,000 7,000 15,000 8,000 175,000 X 12% $9,000

($228,000) 86,000 (142,000) 218,200 $76,200 Correct!

Given Data P13-18: THRIFTY MARKERS, INC. Income Statement For the Quarter Ended March 31 Uptown Downtown Westpark Total Store Store Store $2,500,000 $900,000 $600,000 $1,000,000 1,450,000 513,000 372,000 565,000 1,050,000 387,000 228,000 435,000

Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expenses: Direct advertising General advertising Sales salaries Delivery salaries Store rent Depreciation of store fixtures Depreciation of delivery equipment Total selling expenses Administrative expenses: Store management salaries General office salaries Utilities Insurance on fixtures and inventory Employment taxes General office expenses-other Total administrative expenses Total operating expenses Net operating income (loss) Additional Data: Manager's salary per month New employee's salary per month Employment tax as a percentage of salaries Delivery person's salary per quarter Insurance related to downtown fixtures Discharged employee's salary per quarter Assumed Uptown sales increase per quarter Uptown gross profit rate Check figure: (1) Decrease in net operating income

118,500 20,000 157,000 30,000 215,000 46,950 27,000 614,450 63,000 50,000 89,800 25,500 36,000 25,000 289,300 903,750 $146,250

40,000 7,200 52,000 10,000 70,000 18,300 9,000 206,500 20,000 18,000 31,000 8,000 12,000 9,000 98,000 304,500 $82,500

36,000 4,800 45,000 10,000 65,000 8,800 9,000 178,600 18,000 12,000 27,200 9,000 10,200 6,000 82,400 261,000 ($33,000)

42,500 8,000 60,000 10,000 80,000 19,850 9,000 229,350 25,000 20,000 31,600 8,500 13,800 10,000 108,900 338,250 $96,750

$6,000 $5,000 12% $7,000 1/3 $8,000 $200,000 43%

$9,800

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