The Boot Department at the Omaha Department Store is being considered for closure. The following information relates to boot activity: Sales revenue$350,000 Variable costs: Cost of goods sold 280,000 Sales commissions 30,000 Fixed operating costs 90,000 If 70% of the fixed operating costs are avoidable, should the Boot Department be closed?
A. No, Omaha would be worse off by $13,000.
B. Yes, Omaha would be better off by $50,000.
C. Yes, Omaha would be better off by $23,000.
D. No, Omaha would be worse off by $40,000.
E. None of the answers is correct.
Answer: C
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