### Required Information*[The following information applies to the questions displayed below.]*Suresh Co. expects its five departments to yield the following income for next year:| | Dept. M | Dept. N | Dept. O | Dept. P | Dept. T | Total ||-------------------------|---------|---------|---------|---------|---------|-----------|| **Sales** | $77,000 | $39,000 | $70,000 | $56,000 | $38,000 | $280,000 || **Expenses** | | | | | | || **Avoidable** | $14,800 | $42,400 | $21,600 | $19,000 | $46,800 | $144,600 || **Unavoidable** | $55,800 | $18,600 | $5,200 | $43,200 | $16,800 | $139,600 || **Total expenses** | $70,600 | $61,000 | $26,800 | $62,200 | $63,600 | $284,200 || **Net income (loss)** | $6,400 | $(22,000) | $43,200 | $(6,200) | $(25,600) | $(4,200) |Recompute and prepare the departmental income statements (including a combined total column) for the company under each of the following separate scenarios.#### (1) Management eliminates departments with expected net losses.*DEPARTMENTS WITH EXPECTED NET LOSSES ELIMINATED:*| | Dept. M | Dept. N | Dept. O | Dept. P | Dept. T | Total ||-----------------------|----------|---------|---------|---------|---------|---------|| **Sales** | | | | | | || **Expenses** | | | | | | || **Avoidable** | | | | | | || **Unavoidable** | | | | | | || **Total expenses** | | | | | | || **Net income (loss)** | | | | |

Budgeted income statement is prepared to estimate the amount of profit or loss in a future period.

[The following information applies to the questions displayed below.] Suresh Co. expects its five departments to yield the following income for next year. Dept. M $77,000 Dept. N $ 39,000 Dept. 0 $70,000 Dept. P $56,000 Dept. T $ 38,000 Total Sales $ 280,000 Expenses Avoidable 21,600 5,200 26,800 $43, 200 14,800 55,800 42,400 18,600 61,000 19,000 46,800 16,800 63,600 $(25,600) 144,600 139,600 284, 200 Unavoidable 43,200 Total expenses 70,600 62, 200 Net income (loss) $ 6,400 $(22,000) $(6,200) $ (4,200) Recompute and prepare the departmental income statements (including a combined total column) for the company under each of the following separate scenarios. 1) Management eliminates departments with expected net losses. DEPAR TMENTS WITH EXPECTED NET LOSSES ELIMINATED Dept. M Dept. N Dept. O Dept. P Dept. T Total Sales Expenses: Avoidable Unavoidable Total expenses Net income (loss)

[The following information applies to the questions displayed below.] Suresh Co. expects its five departments to yield the following income for next year. Dept. M $77,000 Dept. N $ 39,000 Dept. 0 $70,000 Dept. P $56,000 Dept. T $ 38,000 Total Sales $ 280,000 Expenses Avoidable 21,600 5,200 26,800 $43, 200 14,800 55,800 42,400 18,600 61,000 19,000 46,800 16,800 63,600 $(25,600) 144,600 139,600 284, 200 Unavoidable 43,200 Total expenses 70,600 62, 200 Net income (loss) $ 6,400 $(22,000) $(6,200) $ (4,200) Recompute and prepare the departmental income statements (including a combined total column) for the company under each of the following separate scenarios. 1) Management eliminates departments with expected net losses. DEPAR TMENTS WITH EXPECTED NET LOSSES ELIMINATED Dept. M Dept. N Dept. O Dept. P Dept. T Total Sales Expenses: Avoidable Unavoidable Total expenses Net income (loss)

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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The following results are available for Division X and Y:Division X Division YProfit before interest and tax P185 000 P172, 000Capital employed P1, 540, 000 P1, 650, 000The cost of capital is 10%.Calculate and comment on the performance of the departments based on:a. Return on capital employed (4 marks)b. Residual incom
Assume a retailing company has two departments-Department A and Department B. The company's most recent contribution format income statement follows: Total Department A Department B $ 800,000 350,000 450,000 $ 350,000 250,000 Sales $ 450,000 Variable expenses Contribution margin 100,000 100,000 350,000 Fixed expenses 400,000 140,000 260,000 Net operating income (loss) $ 50,000 $ (40,000) $ 90,000 The company says that $60,000 of the fixed expenses being charged to Department A are sunk costs or allocated costs that will continue if the segment is discontinued. However, if Department A is discontinued the sales in Department B will drop by 18%. What is the financial advantage (disadvantage) of discontinuing Department A? Multiple Choice $(103,000) $(83,000) $(92,000) $(101,000)
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Kk.1. Subject :- Account
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