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Problem: Module 6 Textbook Problem 7 Learning Objective: 6-4 Make appropriate segment elimination decisions Stuart Company operates three segments. Income statements for the segments imply
Problem: Module 6 Textbook Problem 7 Learning Objective: 6-4 Make appropriate segment elimination decisions Stuart Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated STUART 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 (los) $169,000 (128,000) (19.000) 22,000 (43,000) (5,000) $ (26,000) $239,000 (85,000) (23,000 111,000 (48,000) (15,000 $ 68,000 $259,000 92,000) 28.000 139,000 (26,000) 0 $111.000 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
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