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Relevant Information for REID COMPANY Income Statement Segment Sales Cost of goods sold Sales commissions Contribution margin General fixed oper. exp. (allocation of president's salary)
Relevant Information for REID COMPANY Income Statement Segment Sales Cost of goods sold Sales commissions Contribution margin General fixed oper. exp. (allocation of president's salary) Advertising expense (specific to individual segments) Net income $46,000 $125,000 $100,000 35,500) (41,000) (42,500) (11,000) 73,000 (10,000) (9,000) $(8,500) 54,000 37,500 6,500) 3,000 (10,000) (1,500) (10,000) 47,500 (10,000) Required a. Explain the effect on Reid's profitability if Segment X is eliminated. b. Pre pare comparative income statements for the company as a whole under the two alternatives: () Segment X is retained or (2) Segment X is eliminated. (l) Segment X is Erercise 6-15B Segment elimination decision mnany divides its operations into six divisions. A recent income statement for the
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