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Perez Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. PEREZ COMPANY Income Statements for Year 2 Segment Sales Cost of goods sold A B $ 162,000 $245,000 $262,000 (127,000) (18,000) 17,000 (91,000) (85,000) (24,000) Sales commissions (31,000) Contribution margin General fixed operating expenses (allocation of president's salary) Advertising expense (specific to individual divisions) 153,000 123,000 (37,000) (11,000) $ 75,000 (39,000) (28,000) (6,000) Net income (loss) $ (28,000) $125,000 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 B Prepare a schedule of relevant sales and costs for Segment A. Relevant Rev. and Cost items for Segment A Effect on income $

Perez Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. PEREZ COMPANY Income Statements for Year 2 Segment Sales Cost of goods sold A B $ 162,000 $245,000 $262,000 (127,000) (18,000) 17,000 (91,000) (85,000) (24,000) Sales commissions (31,000) Contribution margin General fixed operating expenses (allocation of president's salary) Advertising expense (specific to individual divisions) 153,000 123,000 (37,000) (11,000) $ 75,000 (39,000) (28,000) (6,000) Net income (loss) $ (28,000) $125,000 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 B Prepare a schedule of relevant sales and costs for Segment A. Relevant Rev. and Cost items for Segment A Effect on income $

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Perez Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. PEREZ COMPANY Income Statements for Year 2 Segment Sales $ 162,000 $245,000 (91,000) $262,000 (85,000) (24,000) 153,000 (28,000) Cost of goods sold (127,000) (18,000) 17,000 Sales commissions Contribution margin General fixed operating expenses (allocation of president's salary) Advertising expense (specific to individual divisions) (31,000) 123,000 (37,000) (11,000) (39,000) (6,000) Net income (loss) $ (28,000) $ 75,000 $125,000 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 B Prepare a schedule of relevant sales and costs for Segment A. Relevant Rev. and Cost items for Segment A Effect on income $
Transcribed Image Text:Perez Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. PEREZ COMPANY Income Statements for Year 2 Segment Sales $ 162,000 $245,000 (91,000) $262,000 (85,000) (24,000) 153,000 (28,000) Cost of goods sold (127,000) (18,000) 17,000 Sales commissions Contribution margin General fixed operating expenses (allocation of president's salary) Advertising expense (specific to individual divisions) (31,000) 123,000 (37,000) (11,000) (39,000) (6,000) Net income (loss) $ (28,000) $ 75,000 $125,000 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 B Prepare a schedule of relevant sales and costs for Segment A. Relevant Rev. and Cost items for Segment A Effect on income $
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