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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. MUNOZ COMPANY Income Statements

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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. MUNOZ COMPANY Income Statements for Year 2 Segment Sales Cost of goods sold Sales commissions Contribution margin General fixed operating expenses (allocation of president's salary) Advertising expense (specific to individual divisions) Net income (loss) B $ 171,000 $248,000 (131, 000) (84,000) (20,000) (31,000) 20,000 133,000 (40,000) (45,000) (3, 000) (17,000) $ (23,000) $ 71,000 $255,000 (88,000) (25,000) 142,000 (38,000) 0 $104,000 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 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 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. MUNOZ COMPANY Comparative Income Statements for the Year 2 Keep Seg. A Eliminate Seg. A Decision Sales Cost of goods sold Sales commissions $ 0 $ 0 Contribution margin General fixed operating expenses Advertising expense Net Income $ 0 $ 0

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