LO 6-4 Exercise 6-14B Segment elimination decision Reid Company operates three segments. Income statements for the segments imply that Reid could improve profitability by eliminating Segment X. REID COMPANY Income Statement Year 2 Y Z Segment Sales Cost of goods sold Sales commissions Contribution margin General fixed oper. exp. (allocation of president's salary) Advertising expense (specific to individual segments) Net income (loss) $ 46,000 (36,500) (6,500) 3,000 (10,000) (1,500) $ (8,500 $125,000 (41,000) (11,000) 73,000 (10,000) (9,000 $ 54.000 $100,000 (42,500) (10,000) 47,500 (10,000) 0 $ 37,500 Required Page 293 a. Explain the effect on Reid's profitability if Segment X is eliminated. b. Prepare comparative income statements for the company as a whole under the two alternatives: (1) Segment X is retained or (2) Segment X is eliminated. Page 293