Exercise 13-14A (Algo) Segment elimination decision LO 13-4 Stuart Company operates three segments. Income statements for...

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Exercise 13-14A (Algo) Segment elimination decision LO 13-4 Stuart Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. STUART COMPANY Income Statements for Year 2 Segment A B Sales $ 163,000 $242,000 $256,000 Cost of goods sold (128,000) (86,000) (78,000) Sales commissions Contribution margin (17,000) (23,000) (28,000) 18,000 133,000 150,000 General fixed operating expenses (allocation of president's salary) Advertising expense (specific to individual divisions) Net income (loss) (36,000) (49,000) (37,000) (5,000) (18,000) 0 $ (23,000) $ 66,000 $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. Exercise 13-14A (Algo) Segment elimination decision LO 13-4 Stuart Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. STUART COMPANY Income Statements for Year 2 Segment A B Sales $ 163,000 $242,000 $256,000 Cost of goods sold (128,000) (86,000) (78,000) Sales commissions Contribution margin (17,000) (23,000) (28,000) 18,000 133,000 150,000 General fixed operating expenses (allocation of president's salary) Advertising expense (specific to individual divisions) Net income (loss) (36,000) (49,000) (37,000) (5,000) (18,000) 0 $ (23,000) $ 66,000 $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.