Question
A company operates numerous vending machines in a variety of locations. The company is expanding, needs more machines, and is deciding whether to move machines
A company operates numerous vending machines in a variety of locations. The company is expanding, needs more machines, and is deciding whether to move machines from unprofitable segments to meet this need. Abbreviated income statements of the two possible unprofitable segments are shown below. The other segments, not shown, are profitable with income over $200,000.
Non-Chain Motels | Local Parks | |||
Sales | $250,000 | $100,000 | ||
Cost of goods sold | 130,000 | 50,000 | ||
Travel to service/refill machines | 125,000 | 45,000 | ||
Allocated corporate costs | 70,000 | 30,000 | ||
Income (loss) | $(75,000) | $(25,000) |
Which segment(s) should be discontinued?
Please show work.
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