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Suresh Co. expects its five departments to yield the following income for next year. Dept. M $85,000 Dept. N $ 45,000 Dept. 0 $79,000 Dept.
Suresh Co. expects its five departments to yield the following income for next year. Dept. M $85,000 Dept. N $ 45,000 Dept. 0 $79,000 Dept. P $66,000 Dept. T $ 44,000 Total $319,000 Sales Expenses Avoidable Unavoidable Total expenses Net income (loss) 17,800 58,200 76,000 $ 9,000 46,000 22,200 68,200 $(23,200) 19,300 5,800 25, 100 $53,900 22,000 53,900 75,900 $(9,900) 52,200 21,000 73,200 $(29,200) 157,300 161,100 318,400 $ (600) Recompute and prepare the departmental income statements (including a combined total column) for the company under each of the following separate scenarios. (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 Expenses: Avoidable Unavoidable Total expenses Net income (loss) (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)
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