Chapter 25, Problem 25E

To determine

An income statement is a financial statement that reports a company's financial performance over a specific accounting period. It also shows the net profit or loss incurred over a specific accounting period.

An avoidable cost is a cost that can be eliminated by not engaging in or no longer performing an activity.

Unavoidable costs is a cost that cannot be eliminated by not engaging in or no longer performing an activity.

Generally all variable cost are avoidable cost and fixed cost are unavoidable cost.

To determine:

We have to determine the following:

1) Income statement by eliminating departments with expected net losses

2) Income statement by eliminating departments with sales dollars that are less than avoidable expenses