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		$	63,000			$	35,000				$	56,000			$	42,000				$	28,000			$	224,000
Expenses
Avoidable			9,800				36,400					22,400				14,000					37,800			$	120,400
Unavoidable			51,800				12,600					4,200				29,400					9,800			$	107,800
Total expenses			61,600				49,000					26,600				43,400					47,600				228,200
Net income (loss)		$	1,400			$	(14,000	)			$	29,400			$	(1,400	)			$	(19,600	)		$	(4,200	)

Recompute and prepare the departmental income statements (including a combined total column) for the company under each of the following separate scenarios.

(1) Management eliminates departments with expected net losses.

Answer 1

Recompute and prepare the departmental income statements (including a combined total column) for the company under each of the following separate scenarios.

	Dept M	Dept N	Dept O	Dept P	Dept T	Total
Sales	63000	0	56000	0	0	119000
Expenses
Avoidable	9800	0	22400	0	0	32200
Unavoidable	51800	12600	4200	29400	9800	107800
Total expense	61600	12600	26600	29400	9800	140000
Net income (loss)	1400	-12600	29400	-29400	-9800	-21000