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Vernon 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 Contribution margin General fixed operating expenses (allocation of president's salary) Advertising expense (specific to individual divisions) Net income (loss) VERNON COMPANY Income Statements for Year 2 Complete this question by entering your answers in the tabs below. Required A Required B 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. Prepare a schedule of relevant sales and costs for Segment A. Relevant Rev. and Cost items for Segment A A B $ 168,000 $254,000 $261,000 (122,000) (22,000) 24,000 156,000 (42,000) (40,000) (5,000) (16,000) $ (23,000) $100,000 $113,000 (76,000) (22,000) (95,000) (29,000) 137,000 (24,000) 0

Vernon 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 Contribution margin General fixed operating expenses (allocation of president's salary) Advertising expense (specific to individual divisions) Net income (loss) VERNON COMPANY Income Statements for Year 2 Complete this question by entering your answers in the tabs below. Required A Required B 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. Prepare a schedule of relevant sales and costs for Segment A. Relevant Rev. and Cost items for Segment A A B $ 168,000 $254,000 $261,000 (122,000) (22,000) 24,000 156,000 (42,000) (40,000) (5,000) (16,000) $ (23,000) $100,000 $113,000 (76,000) (22,000) (95,000) (29,000) 137,000 (24,000) 0

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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Vernon 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 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. Required A Required B VERNON COMPANY Income Statements for Year 2 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. Prepare a schedule of relevant sales and costs for Segment A. Relevant Rev. and Cost items for Segment A Sales Effect on income FA с $261,000 A B $ 168,000 $254,000 (122,000) (22,000) (76,000) (22,000) 24,000 156,000 (42,000) (40,000) (5,000) (16,000) $ (23,000) $100,000 $113,000 0 (95,000) (29,000) 137,000 (24,000) 0
Transcribed Image Text:Vernon 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 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. Required A Required B VERNON COMPANY Income Statements for Year 2 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. Prepare a schedule of relevant sales and costs for Segment A. Relevant Rev. and Cost items for Segment A Sales Effect on income FA с $261,000 A B $ 168,000 $254,000 (122,000) (22,000) (76,000) (22,000) 24,000 156,000 (42,000) (40,000) (5,000) (16,000) $ (23,000) $100,000 $113,000 0 (95,000) (29,000) 137,000 (24,000) 0
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 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. VERNON COMPANY Comparative Income Statements for the Year 2 Keep Seg. A Decision Sales Cost of goods sold Sales commissions Contribution margin General fixed operating expenses Advertising expense Net Income $ $ Eliminate Seg. A 0 $ 0 $ 0 0
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 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. VERNON COMPANY Comparative Income Statements for the Year 2 Keep Seg. A Decision Sales Cost of goods sold Sales commissions Contribution margin General fixed operating expenses Advertising expense Net Income $ $ Eliminate Seg. A 0 $ 0 $ 0 0
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