Read the footnote in Appendix A referring to Home Depot ’s decision to close all of its remainingbig box stores in China. Write a short paragraph identifying the incremental, sunk, and opportunitycosts associated with this decision. Assume that any cost savings will be invested elsewhere in more productive stores.Footnote, CHINA STORE CLOSINGSIn fiscal 2012, the Company closed its remaining seven big box stores in China. As a result of the closings, the Companyrecorded a total charge of $145 million, net of tax, in fiscal 2012. Inventory markdown costs of $10 million are included in Costof Sales, and $135 million of costs related to the impairment of Goodwill and other assets, lease terminations, severance andother charges are included in SG&A in the accompanying Consolidated Statements of Earnings.
Incremental cost.Incremental cost is the additional cost of operating a business, which arises as result ofincreasing the production output. In addition, it can also refer to costs of reducing…
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