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B. Segment Elimination (Differential Analysis) The following is a consolidated Income Statement for TreeTop Pruning. GEOGRAPHIC SEGMENT PER MONTH Sharpstown Cypress Pasadena TOTAL Sales
B. Segment Elimination (Differential Analysis) The following is a consolidated Income Statement for TreeTop Pruning. GEOGRAPHIC SEGMENT PER MONTH Sharpstown Cypress Pasadena TOTAL Sales $20,000 $18,000 $12,000 $50,000 TVC (5,000) (2,000) (6,000) (13,000) TCM 15,000 16,000 6,000 37,000 FC: Salaries 2,000 2,000 2,000 6,000 Advertising 1,000 1,000 1,000 3,000 Administrative 1,000 1,000 2,000 4,000 Depreciation 500 800 1,000 2,300 Rent 1,000 1,500 5,000 7,500 Other 2,000 1,000 1,000 4,000 Total FC (7,500) (7,300) (12,000) (26,800) Net Income 7,500 8,700 (6,000) 8,200 19. If the Pasadena segment is eliminated, advertising, administrative, and rent will be eliminated entirely, and the rest of the Pasadena fixed costs will be decreased by 50%. Required: Calculate the net change in monthly Net Income for the consolidated entity if the Pasadena Office is eliminated.
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