I need help to understand this question.
Beautifully Fabulous Beauty Salon (BFBS) manufactures has two stores. The most recent monthly Income Statement for BFBS.
Less variable expenses
Less traceable fixed expenses
Less common fixed expenses
Net operating income
BFBS is considering closing Store I. If Store I is closed, one-fourth of its traceable fixed expenses would continue unchanged. Also, the closing of Store I would result in a 20% decrease in sales in Store II. BFBS allocates common fixed expenses on the basis of sales dollars.
The following items will be assessed in particular:
Report that evaluates and discusses the impact of the decision of closing Store I. Ensure that you include in your discussion the relevance of traceable and common fixed expenses.
Computations done in Excel (click on cells to see formula) and report provided below computations.