Financial & Managerial Accounting 17th Edition by Jan Williams ,Susan Haka,Mark Bettner,Joseph Carcello

تمرين 16

Shown below is a segmented income statement for Drexel-Hall during the current month:
All stores are similar in size, cam similar products, and operate in similar neighborhoods. Store 1 was established first and was built at a lower cost than were Stores 2 and 3. This lower cost results in less depreciation expense for Store 1. Store 2 follows a policy of minimizing both costs and sales prices. Store 3 follows a policy of providing extensive customer service and charges slightly higher prices than the other two stores.
Use the data presented above for Drexel-Hail to answer the following questions:
a. Assume that by spending an additional $15,000 per month in advertising a particular store. Drexel-Hall can increase the sales of that store by 10 percent. Which store should the company advertise to receive the maximum benefit from this additional advertising expenditure? Explain.
b. From the viewpoint of top management, which is the most profitable of the three stores? Why?
c. Which store manager seems to be pursuing the most effective strategy in managing his or her store? Why?