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(Solved) When a large Omaha Department store moved to a new location, Sherry Winkler was hired as the new shoe department manager. Harold Knox had been the...


When a large Omaha Department store moved to a new location, Sherry Winkler was hired as the new shoe department manager.  Harold Knox had been the manager at the old location.  Her boss is concerned about the poor performance since she became shoe department manager.  The new store location is much larger than the old store location - not all of the space is currently needed.  The extra space is divided up among the various departments including the shoe department.  Utilities and depreciation amounts are allocated based on the number of square feet in each department.

Shoe department Data 

New Location                                                                 Old Location
Sales                                                 $200,000              Sales                                        $100,000
Cost of goods sold                                 40,000              Cost of good sold                          25,000
Salaries                                                 16,000              Salaries                                        12,000
Allocated Utilities & Depreciation          104,000              Allocated Utilities & Depreciation  13,000
Departmental Income                             40,000             Departmental Income                    50,000
Departmental Profit Margin                       20%              Departmental Profit Margin                50%

Katherine Tate is the Manager of the entire store.  In an Interview with Sherry she states: "You are not doing nearly as good as your predecessor, Harold Knox.  He had a 50% margin - you only have a 20% margin.  He had $50,000 of income - you only have $40,000.  You are not going to have much of a future here if you do not start to perform better."

Sherry Winkler is not the type of manager to back down from a fight.  She said to the Store Manager:  "Your figures are skewed by unreasonable data.  By any reasonable measure, I am far surpassing the performance of my predecessor, Harold Knox.  You should be paying me a bonus - you should not be threatening me."

 


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