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	$	168,000			$	254,000			$	264,000
Cost of goods sold		(121,000	)			(85,000	)			(83,000	)
Sales commissions		(22,000	)			(27,000	)			(29,000	)
Contribution margin		25,000				142,000				152,000
General fixed operating expenses (allocation of presidents salary)		(40,000	)			(43,000	)			(26,000	)
Advertising expense (specific to individual divisions)		(4,000	)			(10,000	)			0
Net income (loss)	$	(19,000	)		$	89,000			$	126,000

Required

1. Prepare a schedule of relevant sales and costs for Segment A.

2. 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.

Part B

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
General fixed operating expenses
Advertising expense
Net Income

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 Required A Required