Question
Segment Elimination (Differential Analysis) (5 POINTS) The following is a consolidated Income Statement for TreeTop Pruning. PER MONTH GEOGRAPHIC SEGMENT Sharpstown Cypress Pasadena TOTAL Sales
- Segment Elimination (Differential Analysis) (5 POINTS)
- The following is a consolidated Income Statement for TreeTop Pruning.
| PER MONTH | GEOGRAPHIC SEGMENT |
| ||
|
| Sharpstown | Cypress | Pasadena | TOTAL |
| Sales | $20,000 | $18,000 | $12,000 | $48,000 |
| TVC | (5,000) | (2,000) | (6,000) | (13,000) |
| TCM | 15,000 | 16,000 | 6,000 | 35,000 |
| FC: |
|
|
|
|
| Salaries | 2,000 | 2,000 | 2,000 | 6,000 |
| Advertising | 1,000 | 1,000 | 1,000 | 3,000 |
| Administrative | 1,000 | 1,000 | 2,000 | 4,000 |
| Depreciation | 500 | 800 | 1,000 | 2,300 |
| Rent | 1,000 | 1,500 | 5,000 | 7,500 |
| Other | 2,000 | 1,000 | 1,000 | 4,000 |
|
|
|
|
|
|
| Total FC | (7,500) | (7,300) | (12,000) | (26,800) |
|
|
|
|
|
|
| Net Income | 7,500 | 8,700 | (6,000) | 8,200 |
If the Pasadena segment is eliminated, advertising, administrative, and rent will be eliminated entirely, and the rest of the Pasadena fixed costs will be decreased by 50%.
Required: Calculate the net change in monthly Net Income for the consolidated entity if the Pasadena Office is eliminated.
tayping
no excel sheet
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Managerial Accounting
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
13th Edition
978-0697789938
