Bannock Safety Equipment Ltd.operates two stores,one in Edmonton and another in Thunderbay.The following income statements were prepared for the most recent year:

The store equipment and leasehold improvements have no market value.The building leases can be cancelled without penalty.
Required:
a.Calculate the dollar value of sales required for each store to break-even assuming that all of the fixed costs are to be covered?
b.Should management close the Thunderbay store? Assume that corporate overhead would be reduced by $100,000 if the Thunderbay store is closed.

Question

Bannock Safety Equipment Ltd.operates two stores,one in Edmonton and another in Thunderbay.The following income statements were prepared for the most recent year:
  
The store equipment and leasehold improvements have no market value.The building leases can be cancelled without penalty.
Required:
a.Calculate the dollar value of sales required for each store to break-even assuming that all of the fixed costs are to be covered?
b.Should management close the Thunderbay store? Assume that corporate overhead would be reduced by $100,000 if the Thunderbay store is closed.

Quizplus · Accepted Answer

The Answer of Bannock Safety Equipment Ltd.operates two stores,one in Edmonton and another in Thunderbay.The following income statements were prepared for the most recent year:
  
The store equipment and leasehold improvements have no market value.The building leases can be cancelled without penalty.
Required:
a.Calculate the dollar value of sales required for each store to break-even assuming that all of the fixed costs are to be covered?
b.Should management close the Thunderbay store? Assume that corporate overhead would be reduced by $100,000 if the Thunderbay store is closed.