4 Exercise 6-14A (Algo) Segment elimination decision LO 6-4 2.5 points Franklin Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. FRANKLIN COMPANY Income Statements for Year 2 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) A $ 169,000 (129,000) (15,000) 25,000 (40,000) (3,000) $ (18,000) B $236,000 (86,000) (25,000) 125,000 (41,000) (16,000) $ 68,000 $254,000 (87,000) (23,000) 14,000 (25,000) 0 $119,000 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. X Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Prepare a schedule of relevant sales and costs for Segment A. Relevant Rev. and Cost items for Segment A Sales $ 163,000 X Cost of goods sold Sales commissions Advertising expense Effect on income 163,000 4 Exercise 6-14A (Algo) Segment elimination decision LO 6-4 Franklin Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. 2.5 points FRANKLIN COMPANY Income Statements for Year 2 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) A $ 169,000 $236,000 (129,000) (86,000) (15,000) (25,000) 25,000 125,000 (40,000) (41,000) (3,000) (16,000) $ (18,000) $ 68,000 $254,000 (87,000) (23,000) 144,000 ( (25,000) $119,000 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. Answer is not complete. 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. FRANKLIN COMPANY Decision Comparative Income Statements for the Year 2 Eliminate Keep Seg. A Seg. A $ 649,000 Sales Cost of goods sold Sales commissions $ 649,000 $ 0 Contribution margin General fixed operating expenses Advertising expense Net Income 649,000 $ 0