Question

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 $63,000 Dept. N $ 35,000 Dept. o $56,000 Dept. P $42,000 Dept. T $ 28,000 Total $224,000 Sales Expenses Avoidable Unavoidable Total expenses Net income (loss) 9,800 51,800 61,600 $ 1,400 36,400 12,600 49,000 $(14,000) 22,400 4,200 26,600 $29,400 14,000 29,400 43,400 $(1,400) 37,800 9,800 47,600 $(19,600) $120,400 $ 107,800 228,200 $ (4,200) Recompute and prepare the departmental income statements (including a combined total column) for the company under each of the following separate scenarios.

Answer 1

1
DEPARTMENTS WITH EXPECTED NET LOSSES ELIMINATED
	Dept. M	Dept. N	Dept. O	Dept. P	Dept. T	Total
Sales	63000		56000			119000
Expenses:
Avoidable	9800		22400			32200
Unavoidable	51800	12600	4200	29400	9800	107800
Total expenses	61600	12600	26600	29400	9800	140000
Net income (loss)	1400	(12600)	29400	(29400)	(9800)	(21000)
2
DEPARTMENTS WITH LESS SALES THAN AVOIDABLE EXPENSES ELIMINATED
	Dept. M	Dept. N	Dept. O	Dept. P	Dept. T	Total
Sales	63000		56000	42000		161000
Expenses:
Avoidable	9800		22400	14000		46200
Unavoidable	51800	12600	4200	29400	9800	107800
Total expenses	61600	12600	26600	43400	9800	154000
Net income (loss)	1400	(12600)	29400	(1400)	(9800)	7000