Buckley Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated.BUCKLEY COMPANYIncome Statements for Year 2SegmentA B CSales$330,000 $480,000 $500,000 Cost of goods sold (242,000) (184,000) (190,000)Sales commissions (30,000) (44,000) (44,000)Contribution margin 58,000 252,000 266,000 General fixed operating expenses (allocation of president’s salary) (92,000) (92,000) (92,000)Advertising expense (specific to individual divisions) (6,000) (20,000) 0 Net income (loss)$(40,000) $140,000 $174,000 RequiredPrepare a schedule of relevant sales and costs for Segment A.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.Options for required A table are: Advertising Expense, Cost of Goods Sold, General Fixed Operating Expenses, Sales, Sale Commision Required A Required BPrepare comparative income statements for the company as a wholeand (2) the elimination of Segment A.BUCKLEY COMPANYComparative Income Statements for the Year 2Keep Seg. ADecisionSalesCost of goods soldSales commissionsContribution marginGeneral fixed operating expensesAdvertising expenseNet Income$0Eliminate Seg. A0 $0O Required A Required BPrepare a schedule of relevant sales and costs for Segment A.Relevant Rev. and Cost items for Segment ASalesEffect on income

The reporting of segments splits the activities of a business down into more manageable chunks, also…

Answered: Buckley Company operates three…

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter2: Basic Managerial Accounting Concepts

Section: Chapter Questions

Problem 1MCQ: Accumulating costs means that a. costs must be summed and entered on the income statement. b. each...

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Question

Buckley Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated.

BUCKLEY COMPANY
Income Statements for Year 2
Segment	A		B	C
Sales	$	330,000		$	480,000		$	500,000
Cost of goods sold		(242,000	)		(184,000	)		(190,000	)
Sales commissions		(30,000	)		(44,000	)		(44,000	)
Contribution margin		58,000			252,000			266,000
General fixed operating expenses (allocation of president’s salary)		(92,000	)		(92,000	)		(92,000	)
Advertising expense (specific to individual divisions)		(6,000	)		(20,000	)		0
Net income (loss)	$	(40,000	)	$	140,000		$	174,000

Required

Prepare a schedule of relevant sales and costs for Segment A.
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.

Options for required A table are: Advertising Expense, Cost of Goods Sold, General Fixed Operating Expenses, Sales, Sale Commision