Group Work Ch 6 Question 4 (of 5) value: 2.14 points Exercise 6-14A Segment elim

Question

Group Work Ch 6 Question 4 (of 5) value: 2.14 points Exercise 6-14A Segment elimination decision LO 6-4 Patterson Company operates three segments, Income statements for the segments imply that profitabaty could be improved if Segment A were eliminated PATTERSON COMPANY Income Statements for the Year 2014 Sales Cost of goods sold Sales commissions $ 163,000 $253,000 $260,000 (130,000) (73,000) (77,000) (21,000) (27,000) (27,000) Contribution margin 12,000 153,000 156,000 General fixed oper. exp. (allocation of president's salary) (43,000) (39,000) (24,000) Advertising expense (s (6,000) (16,000) Net income $ (37,000) $98,000 $132,000

Explanation / Answer

Solution a:

Solution b:

Relevant Rev. and cost items for Segment A Sales $163,000.00 Cost of goods sold -$130,000.00 Sales commission -$21,000.00 Advertising expense -$6,000.00 Efect on Income $6,000.00

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