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Required information Exercise 23-10 Analysis of income effects from eliminating departments LO A1 [The following information applies to the questions displayed below.] Suresh Co. expects

Required information

Exercise 23-10 Analysis of income effects from eliminating departments LO A1

[The following information applies to the questions displayed below.] Suresh Co. expects its five departments to yield the following income for next year.

Dept. M Dept. N Dept. O Dept. P Dept. T Total
Sales $ 66,000 $ 38,000 $ 59,000 $ 45,000 $ 31,000 $ 239,000
Expenses
Avoidable 11,300 38,200 23,300 15,500 40,500 $ 128,800
Unavoidable 53,000 14,400 4,500 31,200 11,900 $ 115,000
Total expenses 64,300 52,600 27,800 46,700 52,400 243,800
Net income (loss) $ 1,700 $ (14,600 ) $ 31,200 $ (1,700 ) $ (21,400 ) $ (4,800 )

Recompute and prepare the departmental income statements (including a combined total column) for the company under each of the following separate scenarios.

Exercise 23-10 Part 1

(1) Management eliminates departments with expected net losses.

DEPARTMENTS WITH EXPECTED NET LOSSES ELIMINATED
Dept. M Dept. N Dept. O Dept. P Dept. T Total
Sales $0
Expenses:
Avoidable 0
Unavoidable 0
Total expenses
Net income (loss) $0 $0 $0 $0 $0 $0

Exercise 23-10 Part 2

(2) Management eliminates departments with sales dollars that are less than avoidable expenses.

DEPARTMENTS WITH LESS SALES THAN AVOIDABLE EXPENSES ELIMINATED
Dept. M Dept. N Dept. O Dept. P Dept. T Total
Sales
Expenses:
Avoidable
Unavoidable
Total expenses
Net income (loss)

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