Rundle Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. Segment Sales Cost of goods sold Sales commissions RUNDLE COMPANY Income Statements for Year 2 Contribution margin General fixed operating expenses (allocation of president's salary) Advertising expense (specific to individual divisions) Net income (loss) $164,000 (122,000) (17,000) 25,000 (37,000) (4,000) $ (16,000) $ 106,000 $ 252,000 (72,000) (24,000) 156,000 (39,000) (11,000) $ 247,000 (91,000) (32,000) 124,000 (27,000) 0 $ 97,000 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
Rundle Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. Segment Sales Cost of goods sold Sales commissions RUNDLE COMPANY Income Statements for Year 2 Contribution margin General fixed operating expenses (allocation of president's salary) Advertising expense (specific to individual divisions) Net income (loss) $164,000 (122,000) (17,000) 25,000 (37,000) (4,000) $ (16,000) $ 106,000 $ 252,000 (72,000) (24,000) 156,000 (39,000) (11,000) $ 247,000 (91,000) (32,000) 124,000 (27,000) 0 $ 97,000 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
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter25: Departmental Accounting
Section: Chapter Questions
Problem 3CE
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
Transcribed Image Text:Rundle Company operates three segments Income statements for the segments imply that profitability could be improved if Segment
A were eliminated.
Segment
Sales
Cost of goods sold
Sales commissions
RUNDLE COMPANY
Income Statements for Year 2
Contribution margin,
General fixed operating expenses (allocation of president's salary)
Advertising expense (specific to individual divisions)
Net income (loss)
Complete this question by entering your answers in the tabs below.
$164,000
(122,000)
(17,000)
25,000
(37,000)
(4,000)
$ (16,000)
Required A Required B
Prepare a schedule of relevant sales and costs for Segment A.
Relevant Revenue and Cost Items for Segment A
B
$ 252,000
(72,000)
(24,000)
156,000
(39,000)
(11,000)
$ 106,000
$ 247,000
(91,000)
(32,000)
124,000
(27,000)
0
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
$ 97,000

Transcribed Image Text: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 Revenue and Cost Items for Segment A
Effect on income
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.
Required A Required B
<RA
Complete this question by entering your answers in the tabs below.
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.
RUNDLE COMPANY
Comparative Income Statements for Year 2
Keep Segment
A
Decision
Sales
Cost of goods sold
Sales commissions
Required B >
Contribution margin
General fixed operating expenses
Advertising expense
Net income
Eliminate
Segment A
4
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