Departmental Income Statement

Question

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Answer 1

Question

Chapter 24, Problem 8E

Requirement-1

To determine

To Prepare:

Departmental Income Statement

Requirement-1

Expert Solution

Answer to Problem 8E

Departmental Income Statement is as follows:

Jansen Company
Ski Department
Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Expenses
Cost of Goods Sold	$(425,000)
Salaries	$(112,000)
Utilities	$ (14,000)
Depreciation	$ (42,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

Explanation of Solution

Departmental Income Statement is prepared as follows;

Jansen Company
Ski Department
Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Expenses
Cost of Goods Sold	$(425,000)
Salaries	$(112,000)
Utilities	$ (14,000)
Depreciation	$ (42,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

Concept Introduction:

Contribution Margin Income Statement:

Contribution Margin Income Statement is a format of income statement used for cost volume profit analysis. This statement shows the Variable costs and fixed costs as separate items. It calculates the contribution margin and Net income as well.

Requirement-2

To determine

To Prepare:

The departmental contribution margin income statement

Requirement-2

Expert Solution

Answer to Problem 8E

The departmental contribution margin income statement is as follows:

Jansen Company
Ski Department
Contribution Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Direct Expenses:
Cost of Goods Sold	$(425,000)
Salaries	$ (97,000)
Utilities	$ (11,000)
Depreciation	$ (32,000)

Contribution	$ 40,000

Less: Indirect Expenses:
Salaries	$ (15,000)
Utilities	$ (3,000)
Depreciation	$ (10,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

Explanation of Solution

The departmental contribution margin income statement is prepared as follows:

Jansen Company
Ski Department
Contribution Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Direct Expenses:
Cost of Goods Sold	$(425,000)
Salaries (112000-15000)	$ (97,000)
Utilities (14000-3000)	$ (11,000)
Depreciation (42000-10000)	$ (32,000)

Contribution	$ 40,000

Less: Indirect Expenses:
Salaries	$ (15,000)
Utilities	$ (3,000)
Depreciation	$ (10,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

Concept Introduction:

Contribution Margin Income Statement:

Contribution Margin Income Statement is a format of income statement used for cost volume profit analysis. This statement shows the Variable costs and fixed costs as separate items. It calculates the contribution margin and Net income as well.

To determine

Requirement-3

If the department should be eliminated or not

Expert Solution

Answer to Problem 8E

The department should not be eliminated

Explanation of Solution

Jansen Company
Ski Department
Contribution Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Direct Expenses:
Cost of Goods Sold	$(425,000)
Salaries (112000-15000)	$ (97,000)
Utilities (14000-3000)	$ (11,000)
Depreciation (42000-10000)	$ (32,000)

Contribution	$ 40,000

Less: Indirect Expenses:
Salaries	$ (15,000)
Utilities	$ (3,000)
Depreciation	$ (10,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

The ski department has positive contribution for the indirect expenses, hence it should not be eliminated.

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I need this question answer financial accounting

Assume that each year, a company normally produces and sells 80,000 units of its only product for $40 per unit. The company's average unit costs at this level of activity are given below: Direct materials: $9.50 Direct labor: $10.00 Variable manufacturing overhead: $2.80 Fixed manufacturing overhead: $5.00 Variable selling expenses: $1.70 Fixed selling expenses: $4.50 Total cost per unit: $33.50 The company's relevant range of production is 70,000 - 100,000 units. It believes that spending an additional $235,000 on advertising would increase unit sales by 25%. What is the financial advantage (disadvantage) of spending the additional money on advertising? a. $25,000 b. $19,000 c. $10,000 d. $85,000

Answer 2

Question

Chapter 24, Problem 8E

Requirement-1

To determine

To Prepare:

Departmental Income Statement

Requirement-1

Expert Solution

Answer to Problem 8E

Departmental Income Statement is as follows:

Jansen Company
Ski Department
Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Expenses
Cost of Goods Sold	$(425,000)
Salaries	$(112,000)
Utilities	$ (14,000)
Depreciation	$ (42,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

Explanation of Solution

Departmental Income Statement is prepared as follows;

Jansen Company
Ski Department
Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Expenses
Cost of Goods Sold	$(425,000)
Salaries	$(112,000)
Utilities	$ (14,000)
Depreciation	$ (42,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

Concept Introduction:

Contribution Margin Income Statement:

Contribution Margin Income Statement is a format of income statement used for cost volume profit analysis. This statement shows the Variable costs and fixed costs as separate items. It calculates the contribution margin and Net income as well.

Requirement-2

To determine

To Prepare:

The departmental contribution margin income statement

Requirement-2

Expert Solution

Answer to Problem 8E

The departmental contribution margin income statement is as follows:

Jansen Company
Ski Department
Contribution Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Direct Expenses:
Cost of Goods Sold	$(425,000)
Salaries	$ (97,000)
Utilities	$ (11,000)
Depreciation	$ (32,000)

Contribution	$ 40,000

Less: Indirect Expenses:
Salaries	$ (15,000)
Utilities	$ (3,000)
Depreciation	$ (10,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

Explanation of Solution

The departmental contribution margin income statement is prepared as follows:

Jansen Company
Ski Department
Contribution Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Direct Expenses:
Cost of Goods Sold	$(425,000)
Salaries (112000-15000)	$ (97,000)
Utilities (14000-3000)	$ (11,000)
Depreciation (42000-10000)	$ (32,000)

Contribution	$ 40,000

Less: Indirect Expenses:
Salaries	$ (15,000)
Utilities	$ (3,000)
Depreciation	$ (10,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

Concept Introduction:

Contribution Margin Income Statement:

Contribution Margin Income Statement is a format of income statement used for cost volume profit analysis. This statement shows the Variable costs and fixed costs as separate items. It calculates the contribution margin and Net income as well.

To determine

Requirement-3

If the department should be eliminated or not

Expert Solution

Answer to Problem 8E

The department should not be eliminated

Explanation of Solution

Jansen Company
Ski Department
Contribution Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Direct Expenses:
Cost of Goods Sold	$(425,000)
Salaries (112000-15000)	$ (97,000)
Utilities (14000-3000)	$ (11,000)
Depreciation (42000-10000)	$ (32,000)

Contribution	$ 40,000

Less: Indirect Expenses:
Salaries	$ (15,000)
Utilities	$ (3,000)
Depreciation	$ (10,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

The ski department has positive contribution for the indirect expenses, hence it should not be eliminated.

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Answer 3

Question

Chapter 24, Problem 8E

Requirement-1

To determine

To Prepare:

Departmental Income Statement

Requirement-1

Expert Solution

Answer to Problem 8E

Departmental Income Statement is as follows:

Jansen Company
Ski Department
Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Expenses
Cost of Goods Sold	$(425,000)
Salaries	$(112,000)
Utilities	$ (14,000)
Depreciation	$ (42,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

Explanation of Solution

Departmental Income Statement is prepared as follows;

Jansen Company
Ski Department
Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Expenses
Cost of Goods Sold	$(425,000)
Salaries	$(112,000)
Utilities	$ (14,000)
Depreciation	$ (42,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

Concept Introduction:

Contribution Margin Income Statement:

Contribution Margin Income Statement is a format of income statement used for cost volume profit analysis. This statement shows the Variable costs and fixed costs as separate items. It calculates the contribution margin and Net income as well.

Requirement-2

To determine

To Prepare:

The departmental contribution margin income statement

Requirement-2

Expert Solution

Answer to Problem 8E

The departmental contribution margin income statement is as follows:

Jansen Company
Ski Department
Contribution Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Direct Expenses:
Cost of Goods Sold	$(425,000)
Salaries	$ (97,000)
Utilities	$ (11,000)
Depreciation	$ (32,000)

Contribution	$ 40,000

Less: Indirect Expenses:
Salaries	$ (15,000)
Utilities	$ (3,000)
Depreciation	$ (10,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

Explanation of Solution

The departmental contribution margin income statement is prepared as follows:

Jansen Company
Ski Department
Contribution Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Direct Expenses:
Cost of Goods Sold	$(425,000)
Salaries (112000-15000)	$ (97,000)
Utilities (14000-3000)	$ (11,000)
Depreciation (42000-10000)	$ (32,000)

Contribution	$ 40,000

Less: Indirect Expenses:
Salaries	$ (15,000)
Utilities	$ (3,000)
Depreciation	$ (10,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

Concept Introduction:

Contribution Margin Income Statement:

Contribution Margin Income Statement is a format of income statement used for cost volume profit analysis. This statement shows the Variable costs and fixed costs as separate items. It calculates the contribution margin and Net income as well.

To determine

Requirement-3

If the department should be eliminated or not

Expert Solution

Answer to Problem 8E

The department should not be eliminated

Explanation of Solution

Jansen Company
Ski Department
Contribution Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Direct Expenses:
Cost of Goods Sold	$(425,000)
Salaries (112000-15000)	$ (97,000)
Utilities (14000-3000)	$ (11,000)
Depreciation (42000-10000)	$ (32,000)

Contribution	$ 40,000

Less: Indirect Expenses:
Salaries	$ (15,000)
Utilities	$ (3,000)
Depreciation	$ (10,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

The ski department has positive contribution for the indirect expenses, hence it should not be eliminated.

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Answer 4

Question

Chapter 24, Problem 8E

Requirement-1

To determine

To Prepare:

Departmental Income Statement

Requirement-1

Expert Solution

Answer to Problem 8E

Departmental Income Statement is as follows:

Jansen Company
Ski Department
Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Expenses
Cost of Goods Sold	$(425,000)
Salaries	$(112,000)
Utilities	$ (14,000)
Depreciation	$ (42,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

Explanation of Solution

Departmental Income Statement is prepared as follows;

Jansen Company
Ski Department
Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Expenses
Cost of Goods Sold	$(425,000)
Salaries	$(112,000)
Utilities	$ (14,000)
Depreciation	$ (42,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

Concept Introduction:

Contribution Margin Income Statement:

Contribution Margin Income Statement is a format of income statement used for cost volume profit analysis. This statement shows the Variable costs and fixed costs as separate items. It calculates the contribution margin and Net income as well.

Requirement-2

To determine

To Prepare:

The departmental contribution margin income statement

Requirement-2

Expert Solution

Answer to Problem 8E

The departmental contribution margin income statement is as follows:

Jansen Company
Ski Department
Contribution Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Direct Expenses:
Cost of Goods Sold	$(425,000)
Salaries	$ (97,000)
Utilities	$ (11,000)
Depreciation	$ (32,000)

Contribution	$ 40,000

Less: Indirect Expenses:
Salaries	$ (15,000)
Utilities	$ (3,000)
Depreciation	$ (10,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

Explanation of Solution

The departmental contribution margin income statement is prepared as follows:

Jansen Company
Ski Department
Contribution Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Direct Expenses:
Cost of Goods Sold	$(425,000)
Salaries (112000-15000)	$ (97,000)
Utilities (14000-3000)	$ (11,000)
Depreciation (42000-10000)	$ (32,000)

Contribution	$ 40,000

Less: Indirect Expenses:
Salaries	$ (15,000)
Utilities	$ (3,000)
Depreciation	$ (10,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

Concept Introduction:

Contribution Margin Income Statement:

Contribution Margin Income Statement is a format of income statement used for cost volume profit analysis. This statement shows the Variable costs and fixed costs as separate items. It calculates the contribution margin and Net income as well.

To determine

Requirement-3

If the department should be eliminated or not

Expert Solution

Answer to Problem 8E

The department should not be eliminated

Explanation of Solution

Jansen Company
Ski Department
Contribution Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Direct Expenses:
Cost of Goods Sold	$(425,000)
Salaries (112000-15000)	$ (97,000)
Utilities (14000-3000)	$ (11,000)
Depreciation (42000-10000)	$ (32,000)

Contribution	$ 40,000

Less: Indirect Expenses:
Salaries	$ (15,000)
Utilities	$ (3,000)
Depreciation	$ (10,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

The ski department has positive contribution for the indirect expenses, hence it should not be eliminated.

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Answer 5

Chapter 24, Problem 8E

Requirement-1

To determine

To Prepare:

Departmental Income Statement

Requirement-1

Expert Solution

Answer to Problem 8E

Departmental Income Statement is as follows:

Jansen Company
Ski Department
Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Expenses
Cost of Goods Sold	$(425,000)
Salaries	$(112,000)
Utilities	$ (14,000)
Depreciation	$ (42,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

Explanation of Solution

Departmental Income Statement is prepared as follows;

Jansen Company
Ski Department
Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Expenses
Cost of Goods Sold	$(425,000)
Salaries	$(112,000)
Utilities	$ (14,000)
Depreciation	$ (42,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

Concept Introduction:

Contribution Margin Income Statement:

Contribution Margin Income Statement is a format of income statement used for cost volume profit analysis. This statement shows the Variable costs and fixed costs as separate items. It calculates the contribution margin and Net income as well.

Requirement-2

To determine

To Prepare:

The departmental contribution margin income statement

Requirement-2

Expert Solution

Answer to Problem 8E

The departmental contribution margin income statement is as follows:

Jansen Company
Ski Department
Contribution Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Direct Expenses:
Cost of Goods Sold	$(425,000)
Salaries	$ (97,000)
Utilities	$ (11,000)
Depreciation	$ (32,000)

Contribution	$ 40,000

Less: Indirect Expenses:
Salaries	$ (15,000)
Utilities	$ (3,000)
Depreciation	$ (10,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

Explanation of Solution

The departmental contribution margin income statement is prepared as follows:

Jansen Company
Ski Department
Contribution Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Direct Expenses:
Cost of Goods Sold	$(425,000)
Salaries (112000-15000)	$ (97,000)
Utilities (14000-3000)	$ (11,000)
Depreciation (42000-10000)	$ (32,000)

Contribution	$ 40,000

Less: Indirect Expenses:
Salaries	$ (15,000)
Utilities	$ (3,000)
Depreciation	$ (10,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

Concept Introduction:

Contribution Margin Income Statement:

Contribution Margin Income Statement is a format of income statement used for cost volume profit analysis. This statement shows the Variable costs and fixed costs as separate items. It calculates the contribution margin and Net income as well.

To determine

Requirement-3

If the department should be eliminated or not

Expert Solution

Answer to Problem 8E

The department should not be eliminated

Explanation of Solution

Jansen Company
Ski Department
Contribution Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Direct Expenses:
Cost of Goods Sold	$(425,000)
Salaries (112000-15000)	$ (97,000)
Utilities (14000-3000)	$ (11,000)
Depreciation (42000-10000)	$ (32,000)

Contribution	$ 40,000

Less: Indirect Expenses:
Salaries	$ (15,000)
Utilities	$ (3,000)
Depreciation	$ (10,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

The ski department has positive contribution for the indirect expenses, hence it should not be eliminated.

Answer 6

Chapter 24, Problem 8E

Requirement-1

To determine

To Prepare:

Departmental Income Statement

Requirement-1

Expert Solution

Answer to Problem 8E

Departmental Income Statement is as follows:

Jansen Company
Ski Department
Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Expenses
Cost of Goods Sold	$(425,000)
Salaries	$(112,000)
Utilities	$ (14,000)
Depreciation	$ (42,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

Explanation of Solution

Departmental Income Statement is prepared as follows;

Jansen Company
Ski Department
Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Expenses
Cost of Goods Sold	$(425,000)
Salaries	$(112,000)
Utilities	$ (14,000)
Depreciation	$ (42,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

Concept Introduction:

Contribution Margin Income Statement:

Contribution Margin Income Statement is a format of income statement used for cost volume profit analysis. This statement shows the Variable costs and fixed costs as separate items. It calculates the contribution margin and Net income as well.

Answer 7

Chapter 24, Problem 8E

Requirement-1

To determine

To Prepare:

Departmental Income Statement

Answer 8

Requirement-1

Expert Solution

Answer to Problem 8E

Departmental Income Statement is as follows:

Jansen Company
Ski Department
Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Expenses
Cost of Goods Sold	$(425,000)
Salaries	$(112,000)
Utilities	$ (14,000)
Depreciation	$ (42,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

Answer 9

Requirement-1

Expert Solution

Answer 10

Requirement-1

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

Departmental Income Statement is prepared as follows;

Jansen Company
Ski Department
Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Expenses
Cost of Goods Sold	$(425,000)
Salaries	$(112,000)
Utilities	$ (14,000)
Depreciation	$ (42,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

Concept Introduction:

Contribution Margin Income Statement:

Contribution Margin Income Statement is a format of income statement used for cost volume profit analysis. This statement shows the Variable costs and fixed costs as separate items. It calculates the contribution margin and Net income as well.

Answer 13

Requirement-2

To determine

To Prepare:

The departmental contribution margin income statement

Requirement-2

Expert Solution

Answer to Problem 8E

The departmental contribution margin income statement is as follows:

Jansen Company
Ski Department
Contribution Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Direct Expenses:
Cost of Goods Sold	$(425,000)
Salaries	$ (97,000)
Utilities	$ (11,000)
Depreciation	$ (32,000)

Contribution	$ 40,000

Less: Indirect Expenses:
Salaries	$ (15,000)
Utilities	$ (3,000)
Depreciation	$ (10,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

Explanation of Solution

The departmental contribution margin income statement is prepared as follows:

Jansen Company
Ski Department
Contribution Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Direct Expenses:
Cost of Goods Sold	$(425,000)
Salaries (112000-15000)	$ (97,000)
Utilities (14000-3000)	$ (11,000)
Depreciation (42000-10000)	$ (32,000)

Contribution	$ 40,000

Less: Indirect Expenses:
Salaries	$ (15,000)
Utilities	$ (3,000)
Depreciation	$ (10,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

Concept Introduction:

Contribution Margin Income Statement:

Contribution Margin Income Statement is a format of income statement used for cost volume profit analysis. This statement shows the Variable costs and fixed costs as separate items. It calculates the contribution margin and Net income as well.

Answer 14

Requirement-2

To determine

To Prepare:

The departmental contribution margin income statement

Answer 15

Requirement-2

Expert Solution

Answer to Problem 8E

The departmental contribution margin income statement is as follows:

Jansen Company
Ski Department
Contribution Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Direct Expenses:
Cost of Goods Sold	$(425,000)
Salaries	$ (97,000)
Utilities	$ (11,000)
Depreciation	$ (32,000)

Contribution	$ 40,000

Less: Indirect Expenses:
Salaries	$ (15,000)
Utilities	$ (3,000)
Depreciation	$ (10,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

Answer 16

Requirement-2

Expert Solution

Answer 17

Requirement-2

Expert Solution

Answer 18

Expert Solution

Answer 19

Explanation of Solution

The departmental contribution margin income statement is prepared as follows:

Jansen Company
Ski Department
Contribution Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Direct Expenses:
Cost of Goods Sold	$(425,000)
Salaries (112000-15000)	$ (97,000)
Utilities (14000-3000)	$ (11,000)
Depreciation (42000-10000)	$ (32,000)

Contribution	$ 40,000

Less: Indirect Expenses:
Salaries	$ (15,000)
Utilities	$ (3,000)
Depreciation	$ (10,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

Concept Introduction:

Contribution Margin Income Statement:

Contribution Margin Income Statement is a format of income statement used for cost volume profit analysis. This statement shows the Variable costs and fixed costs as separate items. It calculates the contribution margin and Net income as well.

Answer 20

To determine

Requirement-3

If the department should be eliminated or not

Expert Solution

Answer to Problem 8E

The department should not be eliminated

Explanation of Solution

Jansen Company
Ski Department
Contribution Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Direct Expenses:
Cost of Goods Sold	$(425,000)
Salaries (112000-15000)	$ (97,000)
Utilities (14000-3000)	$ (11,000)
Depreciation (42000-10000)	$ (32,000)

Contribution	$ 40,000

Less: Indirect Expenses:
Salaries	$ (15,000)
Utilities	$ (3,000)
Depreciation	$ (10,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)

The ski department has positive contribution for the indirect expenses, hence it should not be eliminated.

Answer 21

To determine

Requirement-3

If the department should be eliminated or not

Answer 22

Expert Solution

Answer to Problem 8E

The department should not be eliminated

Answer 23

Expert Solution

Answer 24

Expert Solution

Answer 25

Expert Solution

Answer 26

Explanation of Solution

Jansen Company
Ski Department
Contribution Income Statement
For the year ended Dec. 31, 2019

Sales	$ 605,000
Less: Direct Expenses:
Cost of Goods Sold	$(425,000)
Salaries (112000-15000)	$ (97,000)
Utilities (14000-3000)	$ (11,000)
Depreciation (42000-10000)	$ (32,000)

Contribution	$ 40,000

Less: Indirect Expenses:
Salaries	$ (15,000)
Utilities	$ (3,000)
Depreciation	$ (10,000)
Office Expenses	$ (20,000)

Net Income (Loss)	$ (8,000)