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Mathematics, 15.03.2022 05:50 lunaandrew332

wool inc. currently has two retail locations. store a is located in the downtown core, while store b is located in the local shopping mall. the most recent monthly income statement for wool inc. is given below: total store a store b sales $2,100,000 $1,300,000 $800,000 less variable expense 1,260,000 $882,000 378,000 contribution margin $840,000 $418,000 $422,000 less traceable fixed expense 420,000 231,000 189,000 segment margin $420,000 $187,000 $233,000 less common fixed expense 350,000 210,000 140,000 operating income $70,000 $23,000 $93,000 wool inc. is considering closing store a. if store a is closed, one-fourth of its traceable fixed expenses would continue to be incurred. store a has also become a space where local crafters come to socialize. the closing of store a would result in a 20% decrease in sales in store b as the local crafters would be upset and switch to a different brand. wool inc. allocates common fixed expenses on the basis of sales dollars and none of these costs would be saved if a store were shut down. required: a. should wool inc. close store a? show all calculations. b. the president of wool inc. does not understand your recommendation. briefly support your recommendation by explaining why store a should be kept open or shut down

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