Question
Exercise 13-14A (Algo) Segment elimination decision LO 13-4 Solomon Company operates three segments. Income statements for the segments imply that profitability could be improved
Exercise 13-14A (Algo) Segment elimination decision LO 13-4 Solomon Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. SOLOMON COMPANY Income Statements for Year 2 Segment Sales A Cost of goods sold Sales commissions Contribution margin $ 170,000 (131,000) (23,000) B $236,000 $253,000 (73,000) (93,000) (24,000) (23,000) 16,000 139,000 137,000 General fixed operating expenses (allocation of president's salary) Advertising expense (specific to individual divisions) (36,000) (5,000) (51,000) (24,000) (16,000) 0 Net income (loss) $ (25,000) $ 72,000 $113,000 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. 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. Sales Relevant Rev. and Cost items for Segment A Effect on income < Required A Required B >
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