Problem 13-26A (Algo) Eliminating a segment LO 13-4 Franklin Boot Co sells men's, women's and children's boots. For each type of boot sold, it operates a separate department that has its own manager All departments are housed in a single store. In recent years, the children's department has operated at a net loss and is expected to continue to do so. Last year's income statements follow Men's Honen's Children's Department Department Department Sales $ 670,000 5.490,000 $ 180,000 Cost of goods sold (269,000) (179,200) (100,375) Gross margin 401,000 310,800 79,625 Department manager's salary (59,000) (48,000) (28,000) Sales comissions (113,200) (32,600) (31,400) Rent on store lease (28,000) (28,000) (28,000) Store utilities (11.000) (11,300) (11.000) Met income foss $ 189,800 $ 141,200 5 (18,775) Required a. Calculate the contribution to profit Determine whether to eliminate the children's department b-1. Calculate the net income for the company as a whole with the children's department b-2. Confirm the conclusion you reached in Requirement aby preparing income statements for the company without the children's department c. Eliminating the children's department would increase space available to display men's and women's boots Suppose management estimates that a wider selection of adult boots would increase the store's net earnings by $39,000 Would this information affect the decision that you made in Requirement ? Required a. Calculate the contribution to profit. Determine whether to eliminate the children's department. b-1. Calculate the net income for the company as a whole with the children's department b-2. Confirm the conclusion you reached in Requirement a by preparing income statements for the company without the children's department c. Eliminating the children's department would increase space available to display men's and women's boots Suppose management estimates that a wider selection of adult boots would increase the store's net earnings by $39,000. Would this information affect the decision that you made in Requirement ? Complete this question by entering your answers in the tabs below. Required A Required 81 Required B2 Required Calculate the contribution to profit. Determine whether to eliminate the children's department, Contribution to protets) Should the ident's department be eliminated? Required 1 Complete this question by entering your answers in the tabs below. Required A Required BI Required B2 Required Confirm the conclusion you reached in Requirementa by preparing income statements for the company without the children's department Men's Women's Company Department Department Total 0 0 0 0 0 0 Sales Cost of goods sold Gross margin Department manager's salary Sales commissions Ronton store lease Store utiles Net income 0 0 0 0 $ 0$ 0$ (Required B1 Required c> Complete this question by entering your answers in the tabs below. Required A Required B1 Required B2 Required Eliminating the children's department would increase space available to display men's and women's boots. Suppose management estimates that a wider selection of adult boots would increase the store's net earnings by $39,000. Would this information affect the decision that you made in Requirement a? will the decision made in Requirement a be affected?
