Question

2 parts to question

Jordan Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated JORDAN COMPANY Income Statements for the Year 2018 Segment Sales Cost of goods sold Sales comissions Contribution margin General fixed operating expenses (allocation of president's salar Advertising expense (specific to individual divisions) Net Income $ 169,000 (125.000) (22,000) 22.000 (37.000) (5,000) $ (20,000) $252,000 (54,000) (24.000) 144,000 (40,000) (18,000) $ 86,000 $249,000 (76, 000) (27,00) 146,000 (28,000) $118,000 Required a. Prepare a schedule of relevant sales and costs for Segment A b. Prepare comparative income statements for the company as a whole under two alternatives: (1) the retention of Segment A and (2) the elimination of Segment A Complete this question by entering your answers in the tabs below. Required A Required Prepare a schedule of relevant sales and costs for Segment A. Relevant Rev. and Costs for Segment A

Answer 1

Answer 1

Relevant Rev. & Cost items for Segment A

Sales	$169,000
Less : Advertising expense	($5,000)
Less : Cost of goods sold	($125,000)
Less : Sales commissions	($22,000)
Effect on income [incremental]	$17,000

Answer 2

Decision	Keep Seg.A	Eliminate seg. A
Sales	670,000	501,000
Cost Of goods sold	285,000	160,000
Sales Commissions	73000	51000
Contribution Margin	312,000	290,000
Gen fixed Expenses	105,000	105,000
Advertising expense	23000	18000
Net Income	184,000	167,000