Question content area top Part 1 Home Builder​ Supply, a retailer in the home improvement​ industry, currently operates

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Question content area top
Part 1
Home Builder​ Supply, a retailer in the home
improvement​ industry, currently operates seven retail outlets
in Georgia and South Carolina. Management is contemplating building
an eighth retail store across town from its most successful retail
outlet. The company already owns the land for this​ store,
which currently has an abandoned warehouse located on it.
Last​ month, the marketing department spent
$15,000
on market research to determine the extent of customer demand
for the new store. Now Home Builder Supply must decide whether to
build and open the new store.
Which of the following should be included as part of the
incremental earnings for the proposed new retail​ store?
a. The original purchase price of the land where the store will
be located.
b. The cost of demolishing the abandoned warehouse and clearing
the lot.
c. The loss of sales in the existing retail​ outlet, if
customers who previously drove across town to shop at the existing
outlet become customers of the new store instead.
d. The
$15,000
in market research spent to evaluate customer demand.
e. Construction costs for the new store.
f. The value of the land if sold.
g. Interest expense on the debt borrowed to pay the construction
costs.
Question content area bottom
Part 1
a. Should the original purchase price of the land where the
store will be located be included in the incremental earnings for
the proposed new retail​ store?  ​(Select from
the​ drop-down menu.)
▼
No, this item should not be included as part of the incremental
earnings when evaluating the proposal.
Yes, this item should be included.
Part 2
b. Should the cost of demolishing the abandoned warehouse and
clearing the lot be included in the incremental earnings for the
proposed new retail​ store?  ​(Select from the​ drop-down
menu.)
▼
Yes, this item should be included.
No, this item should not be included as part of the incremental
earnings when evaluating the proposal.
Part 3
c. Should the loss of sales in the existing retail​ outlet,
if customers who previously drove across town to shop at the
existing outlet become customers of the new store​ instead, be
included in the incremental earnings for the proposed new
retail​ store?  ​(Select from the​ drop-down menu.)
▼
Yes, this item should be included.
No, this item should not be included as part of the incremental
earnings when evaluating the proposal.
Part 4
d. Should the
$15,000
in market research spent to evaluate customer demand be included
in the incremental earnings for the proposed new
retail​ store?  ​(Select from the​ drop-down menu.)
▼
No, this item should not be included as part of the incremental
earnings when evaluating the proposal.
Yes, this item should be included.
Part 5
e. Should the construction costs for the new store be included
in the incremental earnings for the proposed new
retail​ store?  ​(Select from the​ drop-down menu.)
▼
No, this item should not be included as part of the incremental
earnings when evaluating the proposal.
Yes, this item should be included.
Part 6
f. Should the value of the land if sold be included in the
incremental earnings for the proposed new
retail​ store?  ​(Select from the​ drop-down menu.)
▼
No, this item should not be included as part of the incremental
earnings when evaluating the proposal.
Yes, this item should be included.
Part 7
g. Should the interest expense on the debt borrowed to pay the
construction costs be included in the incremental earnings for the
proposed new retail​ store?  ​(Select from the​ drop-down
menu.)
▼
Yes, this item should be included.
No, this item should not be included as part of the incremental
earnings when evaluating the proposal.