Question

Mango & Associates expects the below departments to make the following income for the upcoming year.

	Dept. M				Dept. N					Dept. O				Dept. P					Dept. T					Total
Sales		$	88,000			$	46,000				$	84,000			$	72,000				$	47,000			$	337,000
Expenses
Avoidable			19,300				47,800					18,800				23,500					54,900			$	164,300
Unavoidable			59,400				24,000					6,100				59,100					23,100			$	171,700
Total expenses			78,700				71,800					24,900				82,600					78,000				336,000
Net income (loss)		$	9,300			$	(25,800	)			$	59,100			$	(10,600	)			$	(31,000	)		$	(1,000	)

Recompute & prepare departmental income statements (which should include a combined total column) for Mango & Associates taking each of the following separate scenarios into consideration.

(1) Mango & Associates' management decided to get rid of departments with expected net losses. DEPARTMENTS WITH EXPECTED NET LOSSES ELIMINATED Dept. M Dept. N Dept. o D ept. P Dept. I Total Sales Expenses: Avoidable Unavoidable Total expenses Net income (loss)

Answer 1

1
DEPARTMENTS WITH EXPECTED NET LOSSES ELIMINATED
	Dept. M	Dept. N	Dept. O	Dept. P	Dept. T	Total
Sales	88000		84000			172000
Expenses:
Avoidable	19300		18800			38100
Unavoidable	59400	24000	6100	59100	23100	171700
Total expenses	78700	24000	24900	59100	23100	209800
Net income (loss)	9300	(24000)	59100	(59100)	(23100)	(37800)
2
DEPARTMENTS WITH LESS SALES THAN AVOIDABLE EXPENSES ELIMINATED
	Dept. M	Dept. N	Dept. O	Dept. P	Dept. T	Total
Sales	88000		84000	72000		244000
Expenses:
Avoidable	19300		18800	23500		61600
Unavoidable	59400	24000	6100	59100	23100	171700
Total expenses	78700	24000	24900	82600	23100	233300
Net income (loss)	9300	(24000)	59100	(10600)	(23100)	10700