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Munoz Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. Segment Sales Cost of
Munoz Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. Segment Sales Cost of goods sold. Sales commissions. Saved IMUNOZ COMPANY Income Statements for Year 2 Contribution margin General fixed operating expenses (allocation of president's salary) Advertising expense (specific to individual divisions) Net income (loss) A $ 166,000 (123,000) (20,000) 23,000 (43,000) (5,000) $ (25,000) $ 239,000 (83,000) (27,000 129,000 (39,000) (15,000) $ 75,000 $ 256,000 (83,000) (30,000) 143,000 (41,000) 0 $ 102,000 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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