Solved

Mini-Case the Bookworm Is a Bookstore and Café Located on a a Busy

question 12

Multiple Choice

Mini-Case
The Bookworm is a bookstore and café located on a busy downtown main street in Denver.The owner,Waata Reader prides himself on the vast selection of books available in the shop.The store has three stories,with both stairs and an elevator to each level.In the back of the first floor is the café,which serves sweets and coffee drinks.Many times customers will linger there over a cup of coffee,deciding which book to purchase.Waata has expanded several times and now he has 22 people on the staff of the current,larger store.
-Bookworm sales have been down for the last year due to new competition from a national chain and Waata is understandably concerned.He recently called his insurance agent to see if this downturn in sales was covered by his business policy.The agent,Will D.the company would definitely cover Waata's losses. An uninsurable risk is one that no insurance company will cover.Examples of things that you cannot insure include market risks (e.g. ,losses that occur because of price changes,style changes,or new products that make your product obsolete) ;political risks (e.g. ,losses from war or government restrictions on trade) ;some personal risks (such as loss of a job,NOT a decrease in sales at the store) ;and some risks of operation such as a strike or equipment malfunction. B.Safe,told Waata:

Definitions:

Segmented Income Statement

An income statement broken down into segments such as product lines, geographical locations, or departments, to analyze performance.

Net Operating Income

Earnings from a company's core business operations, excluding deductions of interest and taxes.

Variable Expenses

Costs that vary in direct proportion to changes in an activity level or volume of production.

Fixed Expenses

Costs that do not fluctuate with the level of production or sales within a certain range, such as rent or salaries.