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Gibson Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. GIBSON COMPANY Segment
Gibson Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. GIBSON COMPANY Segment Sales Cost of goods sold Sales commissions Contribution margin Income Statements for Year 2 A B C $ 164,000 $248,000 $251,000 (125,000) (85,000) (88,000) (17,000) (29,000) (22,000) 22,000 134,000 141,000 (34,000) (5,000) (48,000) (36,000) (18,000) 0 General fixed operating expenses (allocation of president's salary) Advertising expense (specific to individual divisions) Net income (loss) $ (17,000) $ 68,000 $105,000 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. 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. Relevant Rev. and Cost items for Segment A Effect on income $ 0 > Required A Required B > 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 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. GIBSON COMPANY Comparative Income Statements for the Year 2 Decision Sales Cost of goods sold Sales commissions Contribution margin General fixed operating expenses Advertising expense Net Income Keep Seg. A $ Eliminate Seg. A 0 $ 0 0 $ 0 < Required A Required B
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