Suresh Co. expects its five departments to yield the following income for next year.

Re compute and prepare the departmental income statements (including a combined total column) for the company under each of the following separate scenarios: Management (1) does not eliminate any department, (2) eliminates departments with expected net losses, and (3) eliminates departments with sales dollars that are less than avoidable expenses. Explain your answers to parts 2 and 3.

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1 2 Sales Dept. M Dept. N Dept. O $63,000 $35,000 $56,000 Dept. P $42,000 Dept. T $ 28,000 3 Expenses 4 Avoidable 9,800 36,400 22,400 14,000 37,800 5 Unavoidable 51,800 12,600 4,200 29,400 9,800 6 Total expenses 61,600 49,000 26,600 43,400 47,600 7 Net income (loss) $ 1,400 $(14,000) $29,400 $(1,400) $ (19,600)