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Suresh Co. expects its five departments to yield the following income for next year. Dept. M $ 66,000 Dept. N $ 38,000 Dept. o $59,000
Suresh Co. expects its five departments to yield the following income for next year. Dept. M $ 66,000 Dept. N $ 38,000 Dept. o $59,000 Dept. P $45,000 Dept. T $ 31,000 Total $239,000 Sales Expenses Avoidable Unavoidable Total expenses Net income (loss) 11,300 53,000 64,300 $ 1,700 38,200 14,400 52,600 $ (14,600) 23, 300 4,500 27,800 $31, 200 15,500 31, 200 46,700 $(1,700) 40,500 11,900 52,400 $ (21,400) 128,800 115,000 243,800 $ (4, 800) 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 NETLOSSES ELIMINATED Dept. M Dept. N Dept. o Dept. P Dept. T Total Sales $ 0 Expenses Avoidable 0 Unavoidable 0 Total expenses Net income (loss) $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 (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 $ 0 Expenses: Avoidable 0 Unavoidable 0 Total expenses Net income (loss) $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
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