Dropping Unprofitable DepartmentThomas Corporation has four departments, all of which appear to be profitable except department 4. Operating data for the year are as follows:Total Departments 1-3 Department 4$1,000,000SalesCost of salesGross profitDirect expenses$900,000558,000342,000$120,000$100,00073,00027,000$24,00011,00035,000$(8,000)631,000369,000$144,000Common expenses107,000Total expenses251,000Net income (Loss) $118,000Requireda. Calculate the gross profit percentage for departments 1-3 combined and for department 4.Department 1-3 0 %Department 4 0 %b. What effect would elimination of department 4 have had on total firm net income? (Ignore the effect of income tax.)The firm's net income would be: $ 096,000216,000$126,000

Removing a department could impact net income, either positively or negatively, depending on the…

Dropping Unprofitable Department Thomas Corporation has four departments, all of which appear to be profitable except department 4. Operating data for the year are as follows: Total Departments 1-3 Department 4 $1,000,000 Sales Cost of sales 631,000 Gross profit 369,000 Direct expenses $144,000 Common expenses 107,000 Total expenses 251,000 Net income (Loss) $118,000 Required a. Calculate the gross profit percentage for departments 1-3 combined and for department 4. Department 1-3 0 % Department 4 0 96 b. What effect would elimination of department 4 have had on total firm net income? (Ignore the effect of income tax.) The firm's net income would be: $0 $900,000 558,000 342,000 $120,000 96,000 216,000 $126,000 $100,000 73,000 27,000 $24,000 11,000 35,000 $(8,000)

Dropping Unprofitable Department Thomas Corporation has four departments, all of which appear to be profitable except department 4. Operating data for the year are as follows: Total Departments 1-3 Department 4 $1,000,000 Sales Cost of sales 631,000 Gross profit 369,000 Direct expenses $144,000 Common expenses 107,000 Total expenses 251,000 Net income (Loss) $118,000 Required a. Calculate the gross profit percentage for departments 1-3 combined and for department 4. Department 1-3 0 % Department 4 0 96 b. What effect would elimination of department 4 have had on total firm net income? (Ignore the effect of income tax.) The firm's net income would be: $0 $900,000 558,000 342,000 $120,000 96,000 216,000 $126,000 $100,000 73,000 27,000 $24,000 11,000 35,000 $(8,000)

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter14: Decentralized Operations

Section: Chapter Questions

Problem 3SEQ: Division A of Kern Co. has sales of $350,000, cost of goods sold of $200,000, operating expenses of...

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Suresh Company reports the following segment (department) income results for the year. Department M Department N Department 0 Department P $ 82,000 $ 44,000 $ 78,000 $ 65,000 Sales Expenses Avoidable Unavoidable Total expenses Income (loss) Department Department M Department N Department O Department P Department T 17,300 45,400 57,800 21,600 75, 100 67,000 $ 6,900 $ (23,000) Decision 18,000 5,700 23,700 $ 54,300 21,500 54,300 75,800 $ (10,800) Department T $ 43,000 51,300 20,300 71, 600 $ (28,600) Total $ 312,000 a. If the company plans to eliminate departments that have sales less than avoidable costs, which department(s) would be eliminated? 153,500 159, 700 313, 200 $ (1,200)
Dropping Unprofitable Department Thomas Corporation has four departments, all of which appear to be profitable except department 4. Operating data for 2019 are as follows: Total Departments 1-3 Department 4 Sales $962,000 $810,000 $152,000 Cost of sales 640,500 526,500 114,000 Gross profit $321,500 $283,500 $38,000 Direct expenses $144,000 $120,000 $24,000 Common expenses 127,000 106,000 21,000 Total expenses $271,000 $226,000 $45,000 Net income (Loss) $50,500 $57,500 $(7,000) Required a. Calculate the gross profit percentage for departments 1-3 combined and for department 4. Department 1-3 Answer%Department 4 Answer% b. What effect would elimination of department 4 have had on total firm net income? (Ignore the effect of income tax.) The firm's net income would be: $Answer
Dropping Unprofitable Department Thomas Corporation has four departments, all of which appear to be profitable except department 4. Operating data for 2019 are as follows: Total Departments 1-3 Department 4 Sales $962,500 $820,000 $142,500 Cost of sales 655,200 541,200 114,000 Gross profit 307,300 278,800 28,500 Direct expenses $144,000 $120,000 $24,000 Common expenses 117,000 101,000 16,000 Total expenses 261,000 221,000 40,000 Net income (Loss) $46,300 $57,800 $(11,500) Required a. Calculate the gross profit percentage for departments 1-3 combined and for department 4. Department 1-3 Answer=______%Department 4 Answer=______% b. What effect would elimination of department 4 have had on total firm net income? (Ignore the effect of income tax.) The firm's net income would be: $_______
Required information [The following information applies to the questions displayed below.] Suresh Company reports the following segment (department) income results for the year. Sales Department M $ 68,000 Department N $ 38,000 Department 0 $ 65,000 Department P $ 47,000 Department T $ 33,000 Total $ 251,000 Expenses Avoidable 12,300 Unavoidable Total expenses Income (loss) 53,800 66,100 39,400 15,600 55,000 23,900 4,700 28,600 16,500 36,400 42,300 13,300 134,400 123,800 52,900 55,600 258,200 $ 1,900 $ (17,000) $ 36,400 $ (5,900) $ (22,600) $ (7,200) b. Compute the total increase in income if the departments with sales less than avoidable costs, as identified in part a, are eliminated. Total increase in income $ 3,700
Suresh Company reports the following segment (department) income results for the year. Department N Department 0 Department P $36,000 $ 57,000 $ 43,000 Sales Expenses Avoidable. Unavoidable Total expenses Income (loss) Department M $ 64,000 otal increase in income 10,300 52,200 62,500 $1,500 37,000 13,200 50,200 $ (14,200) $ 30,000 22,700 4,300 27,000 $ 30,000 14,500 30,000 44,500 $ (1,500) Department T $ 29,000 38,700 10,500 49,200 $ (20,200) Total $ 229,000 123,200 110,200 Compute the total increase in income if the departments with sales less than avoidable costs, as identified in part a, are eliminated 233,400 $ (4,400)
Dropping Unprofitable Department Penn Corporation has four departments, all of which appear to be profitable except department 4. Operating data for 2019 are as follows: Total Departments 1-3 Department 4 $1,230,000 801,900 428,100 $177,000 145,200 Total expenses 322,200 Net income (Loss) $105,900 a. Calculate the gross profit percentage for departments 1-3 combined and for department 4. Department 1-3 90.75 Department 4 9.25 b. What effect would elimination of department 4 have had on total firm net income? (Ignore the effect of income tax.) The firm's net income would be: $ 115,900 Sales Cost of sales Gross profit Direct expenses Common expenses X % X% $1,050,000 661,500 388,500 $150,000 122,600 272,600 $115,900 $180,000 140,400 39,600 $27,000 22,600 49,600 $(10,000) X
Required Information [The following information applies to the questions displayed below.] Suresh Company reports the following segment (department) income results for the year. Sales Expenses Department M $ 89,000 Department N $ 47,000 Department o $ 85,000 Department P $ 73,000 Department T $ 46,000 Total $ 340,000 48,400 24,600 Total expenses Income (loss) 73,000 $ 9,400 $ (26,000) 19,100 6,200 25,300 $ 59,700 24,000 55,800 167,100 59,700 23,800 174,100 83,700 79,600 341,200 $ (10,700) $ (33,600) $ (1,200) Avoidable Unavoidable 19,800 59,800 79,600 b. Compute the total increase in income if the departments with sales less than avoidable costs, as identified in part a, are eliminated. Answer is complete but not entirely correct. Total increase in income $ 10,800
Required information [The following information applies to the questions displayed below.] Suresh Company reports the following segment (department) Income results for the year. Department P $ 66,000 Sales Expenses Avoidable Unavoidable Total expenses Income (loss) Department Department M Department N Department O Department P Department T Department M Department N $ 85,000 $ 45,000 Decision 17,800 58,200 76,000 $ 9,000 46,000 22,200 68,200 $ (23,200) Department O $ 79,000 19,300 5,800 25,100 $ 53,900 a. If the company plans to eliminate departments that have sales less than avoidable costs. 22,000 53,900 75,900 $ (9,900) Department T $ 39,000 52,200 21,000 73,200 $ (34,200) Total $ 314,000 157,300 161,100 318,400 $ (4,400) department(s) would be eliminated?
[The following information applies to the questions displayed below.] Suresh Company reports the following segment (department) income results for the year. Department M $ 87,000 Department P $ 69,000 Department T $ 42,000 Total Department N Department 0 $ 47,000 $ 83,000 $ 328,000 Sales Expenses Avoidable 18,800 59,000 77,800 $ 9,200 47,200 23,400 70,600 $ (23,600) 18,500 6,000 24,500 $ 58,500 23,000 58,500 81,500 $ (12,500) 54,000 22,400 76,400 $ (34,400) 161,500 169,300 330,800 $ (2,800) Unavoidable Total expenses Income (loss) Exercise 23-9 (Algo) Part 1 a. If the company plans to eliminate departments that have sales less than avoidable costs, which department(s) would be eliminated? Department Decision Department M Department N Department O Department P Department T
Suresh Co. expects its five departments to yield the following income for next year.
None
[The following information applies to the questions displayed below.] Suresh Company reports the following segment (department) income results for the year. Department M Department N Department O Department P Department T Total Sales $ 67,000 $ 37,000 $ 60,000 $ 46,000 $ 32,000 $ 242,000 Expenses Avoidable 11,800 38,800 23,600 16,000 41,400 131,600 Unavoidable 53,400 15,000 4,600 31,800 12,600 117,400 Total expenses 65,200 53,800 28,200 47,800 54,000 249,000 Income (loss) $ 1,800 $ (16,800) $ 31,800 $ (1,800) $ (22,000) $ (7,000) Compute the total increase in income if the departments with sales less than avoidable costs, as identified in part a, are eliminated.