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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
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 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) A B $ 164,000 $ 242,000 (129,000) (77,000) (15,000) (29,000) 20,000 136,000 (43,000) (37,000) (7,000) (11,000) $ (30,000) $ 88,000 C $245,000 (76,000) (29,000 140,000 (32,000) $108,000 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. 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. PEREZ COMPANY Comparative Income Statements for the Year 2 Decision Keep Seg. A Eliminate Seg. A Sales Cost of goods sold Sales commissions Contribution margin $ 0 $ 0 General fixed operating expenses Advertising expense Net Income $ 0 $ 0
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