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Finch Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. PINCH COMPANY Income Statements
Finch Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. PINCH COMPANY Income Statements for Year 2 Segment Sales Cost of goods sold Sales commissions $ 169,000 (127,000) (21,000) $243,000 $262,000 (79,000) (84,000) (31,000) (26,000) Contribution margin 21,000 133,000 152,000 General fixed operating expenses (allocation of president's salary) (43,000) (43,000) (43,000) Advertising expense (specific to individual divisions) Net income (loan) (4,000) (14,000) $ (26,000) $ 76,000 $109,000 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
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