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Rundle Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. RUNDLE COMPANY Income Statements
Rundle Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. RUNDLE 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 (loss) $ 172,000 (128,000) (21,000) 23,000 (44,000) (5,000) $ (26,000) B $244,000 (77,000) (22,000) 145,000 (44,000) (10,000) $ 91,000 $258,000 (93,000) (27,000) 138,000 (37,000) $101,000 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 Prepare a schedule of relevant sales and costs for Segment A. Relevant Rev. and Cost items for Segment A Sales Effect on income 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. RUNDLE COMPANY Comparative Income Statements for the Year 2 Keep Seg. A Eliminate Seg. A Decision Sales Cost of goods sold Sales commissions Contribution margin General fixed operating expenses Advertising expense Net Income
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