Question

Whether to Discontinue a Department Williams and Lloyd Company is trying to decide whether to discontinue department B. Operating results for the year just ended for each of the company's three departments and for the entire operation are shown. Net sales Cost of goods sold Gross profit Direct operating expenses Departmental direct operating margin Indirect operating expenses Operating income (loss) Dept. A $379,000 204,000 $175,000 100,000 $75,000 47,000 $28,000 Dept. B Dept. $264,000 $290,000 149,000 161,000 $115,000 $129,000 86,000 81,000 $29,000 $48,000 34,000 36,000 $(5,000 $12,000 Total $933,000 514,000 $419,000 267,000 $152,000 117,000 $35,000 Required: 1. Prepare an additional column that combines departments A and C only. Williams and Lloyd Company Dept. A Dept. B Dept.C Total A & C Only $379,000 $264,000 $290,000 $933,000 $ 669,000 204,000 149,000 161,000 514,000 365,000 ✓ Net sales Cost of goods sold Gross profit $175,000 100,000 $115,000 $129,000 $419,000 $ 304,000 86,000 81,000 267,000 181,000 Direct operating expenses Departmental direct operating margin $75,000 $29,000 $48,000 $152,000 $123,000 36,000 117,000 117,000 Indirect operating expenses 47,000 34,000 Operating income (loss) $28,000 $5,000 $12,000 $35,000 $40,000 X

I just need help with the red x

Answer 1

Enter as 6,000

.

Operating income(Loss)

= departmental operating margin - indirect operating expenses

= 123,000 - 117,000

= 6,000