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QUESTION TWO "We've got to eliminate Department A", said Bob Cash, vice president of your company, Bogoso Super Mall Ghana Limited. "It's a drag on the entire organization. If anyone needs proof, just look at the last quarter's income statement." The statement to which Mr. Cash was referring to is shown below: BOGOSO SUPER MALL GHANA LIMITED INCOME STATEMENT FOR THE QUARTER ENDING JUNE 30, 2020 Total |Dept A Dept B Dept C GHC GHC GHC GHC Sales 7,500,000 |1,400,0003,500,000|2,600,000 Less Variable expenses 4,518,000 780,000 2,178,000 1,560,000 2,982,000 620,000 1,322,000| 1,040,000 Contribution margin Less Fixed expenses: Direct advertising 487,500 |130,000 |200,000 | 157,500 General advertising |(allocated on sales) 150,000 28,000 70,000 | 52,000 Salaries 180,000 | 290,000 |210,000 95,000 | 157,500 | 130,000 680,000 Rent on building 382,500 |(allocated on space) Utilities 154,500 40,000 | 68,000 46,500 Employer's -SSNIT (allocated on salaries paid) 102,000 27,000 | 43,500 31,500 Depreciation of fixtures Insurance on inventory 200,000 54,000 81,500 64,500 & fixtures 18,500 6,000 7,000 5,500 |General office expenses 300,000 100,000 100,000 100,000| Service dept. expenses 225,000 75,000 75,000 75,000 872,500 167,500 2,700,000 735,000 1,092,500 Net income (loss) 282,000 (115,000) 229,500 You have been assigned the task of making a recommendation to the president as to whether or not Department A should be eliminated. gathered the following information: You have

QUESTION TWO "We've got to eliminate Department A", said Bob Cash, vice president of your company, Bogoso Super Mall Ghana Limited. "It's a drag on the entire organization. If anyone needs proof, just look at the last quarter's income statement." The statement to which Mr. Cash was referring to is shown below: BOGOSO SUPER MALL GHANA LIMITED INCOME STATEMENT FOR THE QUARTER ENDING JUNE 30, 2020 Total |Dept A Dept B Dept C GHC GHC GHC GHC Sales 7,500,000 |1,400,0003,500,000|2,600,000 Less Variable expenses 4,518,000 780,000 2,178,000 1,560,000 2,982,000 620,000 1,322,000| 1,040,000 Contribution margin Less Fixed expenses: Direct advertising 487,500 |130,000 |200,000 | 157,500 General advertising |(allocated on sales) 150,000 28,000 70,000 | 52,000 Salaries 180,000 | 290,000 |210,000 95,000 | 157,500 | 130,000 680,000 Rent on building 382,500 |(allocated on space) Utilities 154,500 40,000 | 68,000 46,500 Employer's -SSNIT (allocated on salaries paid) 102,000 27,000 | 43,500 31,500 Depreciation of fixtures Insurance on inventory 200,000 54,000 81,500 64,500 & fixtures 18,500 6,000 7,000 5,500 |General office expenses 300,000 100,000 100,000 100,000| Service dept. expenses 225,000 75,000 75,000 75,000 872,500 167,500 2,700,000 735,000 1,092,500 Net income (loss) 282,000 (115,000) 229,500 You have been assigned the task of making a recommendation to the president as to whether or not Department A should be eliminated. gathered the following information: You have

Entrepreneurial Finance
Entrepreneurial Finance
6th Edition
ISBN:9781337635653
Author:Leach
Publisher:Leach
Chapter4A: Nopat Breakeven: Revenues Needed To Cover Total Operating Costs
Section: Chapter Questions
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QUESTION TWO "We've got to eliminate Department A", said Bob Cash, vice president of your company, Bogoso Super Mall Ghana Limited. "It's a drag on the entire organization. If anyone needs proof, just look at the last quarter's income statement." The statement to which Mr. Cash was referring to is shown below: BOGOSO SUPER MALL GHANA LIMITED INCOME STATEMENT FOR THE QUARTER ENDING JUNE 30, 2020 Total |Dept A Dept B Dept C GHC GHC GHC GHC Sales 7,500,000 |1,400,0003,500,000|2,600,000 Less Variable expenses 4,518,000 780,000 2,178,000 1,560,000 2,982,000 620,000 1,322,000| 1,040,000 Contribution margin Less Fixed expenses: Direct advertising 487,500 |130,000 |200,000 | 157,500 General advertising |(allocated on sales) 150,000 28,000 70,000 | 52,000 Salaries 180,000 | 290,000 |210,000 95,000 | 157,500 | 130,000 680,000 Rent on building 382,500 |(allocated on space) Utilities 154,500 40,000 | 68,000 46,500 Employer's -SSNIT (allocated on salaries paid) 102,000 27,000 | 43,500 31,500 Depreciation of fixtures Insurance on inventory 200,000 54,000 81,500 64,500 & fixtures 18,500 6,000 7,000 5,500 |General office expenses 300,000 100,000 100,000 100,000| Service dept. expenses 225,000 75,000 75,000 75,000 872,500 167,500 2,700,000 735,000 1,092,500 Net income (loss) 282,000 (115,000) 229,500 You have been assigned the task of making a recommendation to the president as to whether or not Department A should be eliminated. gathered the following information: You have
Transcribed Image Text:QUESTION TWO "We've got to eliminate Department A", said Bob Cash, vice president of your company, Bogoso Super Mall Ghana Limited. "It's a drag on the entire organization. If anyone needs proof, just look at the last quarter's income statement." The statement to which Mr. Cash was referring to is shown below: BOGOSO SUPER MALL GHANA LIMITED INCOME STATEMENT FOR THE QUARTER ENDING JUNE 30, 2020 Total |Dept A Dept B Dept C GHC GHC GHC GHC Sales 7,500,000 |1,400,0003,500,000|2,600,000 Less Variable expenses 4,518,000 780,000 2,178,000 1,560,000 2,982,000 620,000 1,322,000| 1,040,000 Contribution margin Less Fixed expenses: Direct advertising 487,500 |130,000 |200,000 | 157,500 General advertising |(allocated on sales) 150,000 28,000 70,000 | 52,000 Salaries 180,000 | 290,000 |210,000 95,000 | 157,500 | 130,000 680,000 Rent on building 382,500 |(allocated on space) Utilities 154,500 40,000 | 68,000 46,500 Employer's -SSNIT (allocated on salaries paid) 102,000 27,000 | 43,500 31,500 Depreciation of fixtures Insurance on inventory 200,000 54,000 81,500 64,500 & fixtures 18,500 6,000 7,000 5,500 |General office expenses 300,000 100,000 100,000 100,000| Service dept. expenses 225,000 75,000 75,000 75,000 872,500 167,500 2,700,000 735,000 1,092,500 Net income (loss) 282,000 (115,000) 229,500 You have been assigned the task of making a recommendation to the president as to whether or not Department A should be eliminated. gathered the following information: You have
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