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)