Question

Required information 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. M $68,000 Dept. N $ 38,000 Dept. 0 $65,000 Dept. P $47,000 Dept. T $ 33,000 T otal $251,000 Sales Expenses Avoidable Unavoidable Total expenses Net income (loss) 12,300 53,800 66,100 $ 1,900 39,400 15,600 55,000 $(17,000) 23,900 4,700 28, 600 $36, 400 16,500 36, 400 52,900 $(5,900) 42,300 13,300 55,600 $(22,600) $134, 400 $123, 800 258, 200 $ (7,200) Recompute and prepare the departmental income statements (including a combined total column) for the company under each of the following separate scenarios. Exercise 23-10 Part 1 (1) Management eliminates 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) 0 $ 0 $ 0 $ 0 $ 0

Answer 1

1
DEPARTMENTS WITH EXPECTED NET LOSSES ELIMINATED
	Dept. M	Dept. N	Dept. O	Dept. P	Dept. T	Total
Sales	68000		65000			133000
Expenses:
Avoidable	12300		23900			36200
Unavoidable	53800	15600	4700	36400	13300	123800
Total expenses	66100	15600	28600	36400	13300	160000
Net income (loss)	1900	-15600	36400	-36400	-13300	-27000
2
DEPARTMENTS WITH LESS SALES THAN AVOIDABLE EXPENSES ELIMINATED
	Dept. M	Dept. N	Dept. O	Dept. P	Dept. T	Total
Sales	68000		65000	47000		180000
Expenses:
Avoidable	12300		23900	16500		52700
Unavoidable	53800	15600	4700	36400	13300	123800
Total expenses	66100	15600	28600	52900	13300	176500
Net income (loss)	1900	-15600	36400	-5900	-13300	3500