The Cosmetics Department at the Webb's Department Store Is Being

question 23

Multiple Choice

The Cosmetics Department at the Webb's Department Store is being considered for closure. The following information relates to cosmetics activity: $\begin{array} { l r } \text { Sales revenue } & \$ 300,000 \\\text { Variable costs: } & \\\text { Cost of goods sold } &200,000 \\\text { Sales commissions } & 20,000\\\text { Fixed operating costs }& 100,000\end{array}$ If all of the fixed operating costs are avoidable, should the Cosmetics Department be closed?

• A)Yes, Webb's Department Store would be better off by $20,000.
• B)Yes, Webb's Department Store would be better off by $100,000.
• C)No, Webb's Department Store would be worse off by $80,000.
• D)No, Webb's Department Store would be worse off by $100,000.
• E)No, Webb's Department Store would be worse off by $200,000.

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