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Oriole Equipment sells equipment to sports enthusiasts. Doug Oriole, the company's president, just received the following income statement reporting the results of the past year.
Oriole Equipment sells equipment to sports enthusiasts. Doug Oriole, the company's president, just received the following income statement reporting the results of the past year. Doug is concerned that two of the company's divisions are showing a loss, and he wonders if the company should stop selling baseball and basketball gear to concentrate solely on soccer gear. Prepare a segment margin income statement. Fixed cost of goods sold and fixed operating expenses can be traced to each division. (If the amount is negative then enter with a negative sign preceding the number, e.g. 5,125 or parenthesis, e.g. (5,125).) Doug wants to change the allocation method used to allocate common fixed costs to the divisions. His plan is to allocate these costs based on sales revenue. Will this new allocation method change your decision on whether to close the baseball and basketball divisions? Changing allocation methods change the decision
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