Dept. M Dept. N Dept. O Dept. P Dept. T Total 63,000 $35,000 $56,000 42,000 $28,

Question

Dept. M Dept. N Dept. O Dept. P Dept. T Total 63,000 $35,000 $56,000 42,000 $28,000 $224,000 Sales Expenses 22,400 4,200 14,000 7,800 $120,400 Avoidable Unavoidable 9,800 51,800 36,400 12,600 49,000 1,400 $(14,000) 29,400 43,400 $29,400 $ (1,400) 9,800$107,800 228,200 $(19,600) $ (4,200) Total expenses 61,600 26,600 47,600 Net income (loss) Recompute and prepare the departmental income statements (including a combined total column) for the company under each of the following separate scenarios alue: .00 points 1) Management eliminates departments with expected net losses DEPARTMENTS WITH EXPECTED NET LOSSES ELIMINATED Dept. O $ 56,000 Dept. M Dept. N Dept. P Dept. T Total Sales $ 63,000 $119,000 Expenses 32,200 107,800 140,000 1,400$ (12,600)$29,400 $ (29,400)(9,800)$ (21,000) 9,800 51,800 61,600 22,400 4,200 26,600 Avoidable Unavoidable 12,600 29,400 9,800 Total expenses 12,600 29,400 9,800 Net income (loss)

Explanation / Answer

1) Management eliminates departments with expected net losses:

Dept.M Dept.N Dept.O Dept.P Dept.T Total Sales 63000 56000 119000 Expenses Avoidable 9800 22400 32200 unavoidable 51800 12600 4200 29400 9800 107800 Total expenses 61600 12600 26600 29400 9800 140000 Net income (loss) 1400 (12600) 29400 (29400) (9800) (21000)

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