Required information [The following information applies to the questions displayed below.]
Suresh Co. expects its five departments to yield the following income for next year.
Dept. M Dept. N Dept. O Dept. P Dept. T Total
Sales $ 81,000 $ 43,000 $ 77,000 $ 62,000 $ 42,000 $ 305,000
Expenses Avoidable 16,800 44,800 20,600 21,000 50,400 153,600
Unavoidable 57,400 21,000 5,600 50,800 19,600 154,400
Total expenses 74,200 65,800 26,200 71,800 70,000 308,000
Net income (loss) $ 6,800 $ (22,800 ) $ 50,800 $ (9,800 ) $ (28,000 ) $ (3,000 )
Recompute and prepare the departmental income statements (including a combined total column) for the company under each of the following separate scenarios.
(2) Management eliminates departments with sales dollars that are less than avoidable expenses
DEPARTMENTS WITH EXPECTED NET LOSSES ELIMINATED
Dept. M Dept. N Dept. O Dept. P Dept. T Total
Sales
Expenses
Avoidable
Unavoidable
Total expenses
Net income (loss)