Question
Perez Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. PEREZ COMPANY Income
Perez Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. PEREZ COMPANY Income Statements for Year 2 Segment A B C Sales Cost of goods sold Sales commissions Contribution margin $ 171,000 (128,000) (16,000) $245,000 $245,000 (73,000) (78,000) (29,000) (22,000) 27,000 143,000 145,000 General fixed operating expenses (allocation of president's salary) Advertising expense (specific to individual divisions) (42,000) (6,000) (37,000) (43,000) (13,000) 0 Net income (loss) $ (21,000) $ 93,000 $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. 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. Sales Relevant Rev. and Cost items for Segment A Effect on income 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. PEREZ 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
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