Question

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		$	89,000			$	47,000				$	85,000			$	73,000				$	48,000			$	342,000
Expenses
Avoidable			19,800				48,400					19,100				24,000					55,800				167,100
Unavoidable			59,800				24,600					6,200				59,700					23,800				174,100
Total expenses			79,600				73,000					25,300				83,700					79,600				341,200
Net income (loss)		$	9,400			$	(26,000	)			$	59,700			$	(10,700	)			$	(31,600	)		$	(800	)

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.

Answer 1

--requirement [2]
>Dept N and Dept T will be eliminated as they have Sales less than avoidable expense

	Dept M	Dept N	Dept O	Dept P	Dept T	Total
Sales	$                  89,000.00	$                                 -	$                                      85,000.00	$          73,000.00	$                         -	$        247,000.00
Expenses:
Avoidable	$                  19,800.00	$                                 -	$                                      19,100.00	$          24,000.00	$                         -	$          62,900.00
Unavoidable	$                  59,800.00	$                  24,600.00	$                                         6,200.00	$          59,700.00	$         23,800.00	$        174,100.00
Total Expenses	$                  79,600.00	$                  24,600.00	$                                      25,300.00	$          83,700.00	$         23,800.00	$        237,000.00
Net Income (Loss)	$                    9,400.00	$               (24,600.00)	$                                      59,700.00	$        (10,700.00)	$       (23,800.00)	$          10,000.00