Question

Exercise 23-10 Analysis of income effects from eliminating departments LO A1 [The following information applies to the questions displayed below] Suresh Co. expects its five departments to yield the following income for next year Dept. T $ 37,000 Dept. 0 $69,e0e Dept. P $55,000 Total Dept. M $76,000 Dept. N $ 38,000 $275,80e Sales Expenses Avoidable 45,900 16,100 62,000 $(25,000) $141,800 $137,200 279,e00 $ (4,000) 21,300 5,100 26,400 $42,600 18,500 42,600 61,100 $(6,100) 14,300 55,400 69,700 $ 6,300 41,800 18,000 59,800 Unavoidable Total expenses Net income (loss) $(21,800) Recompute and prepare the departmental income statements (including a comi each of the following separate scenarios. ed total column) for the company under Exercise 23-10 Part 1 (1) Management eliminates departments with expected net losses DEPARTMENTS WITH EXPECTED NET LOSSES ELIMINATED Dept. O Dept. T Total Dept. N Dept. P Dept. M Sales Expenses Avoidable Unavoidable Total expenses Net income (loss)

Answer 1

Statement

	Dept M	Dept N	Dept O	Dept P	Dept T	Total
Sales	76000	0	69000	0	0	145000
Expenses
Avoidable	14300	0	21300	0	0	35600
Unavoidable	55400	18000	5100	42600	16100	137200
Total expenses	69700	18000	26400	42600	16100	172800
Net income (loss)	6300	-18000	42600	-42600	-16100	-27800