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Solomon Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. SOLOMON COMPANY Income
Solomon Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. SOLOMON COMPANY Income Statements for Year 2 Segment Sales B $ 165,000 $247,000 $264,000 35 Cost of goods sold (122,000) (88,000) (76,000) Sales commissions Contribution margini General fixed operating expenses (allocation of president's salary) Advertising expense (specific to individual divisions) Net income (loss) (20,000) (30,000) (24,000) 29,000 129,000 164,000 (40,000) (47,000) (25,000) (4,000) (13,000) e $ (21,000) $ 69,000 $139,000 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.
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