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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) A $ 172,000 (130,000) (23,000) 19,000 (37,000) (4,000) $ (22,000) B $247,000 (87,000) (25,000) 135,000 (48,000) (19,000) $ 68,000 $264,000 (81,000) (26,000) 157,000 (26,000) $131,000 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 Required A Required B > Required A Required 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. 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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