Whether to Discontinue a Department Williams and Lloyd Company is trying to decide whether to discontinue department B. Operating results for the year just ended for each of th company's three departments and for the entire operation are as follows: Net sales Cost of goods sold Gross profit Direct operating expenses Departmental direct operating margin Indirect operating expenses Operating income (loss) Required: Dept. A Dept. B Dept. c Total $380,000 $260,000 $290,000 $930,000 210,000 140,000 160,000 510,000 $170,000 $120,000 $130,000 $420,000 100,000 90,000 80,000 270,000 $70,000 $30,000 $50,000 $150,000 40,000 35,000 40,000 115,000 $30,000 $(5,000) $ 10,000 $ 35,000 1. Prepare an additional column that combines departments A and Conly. Use a minus sign to indicate an operating loss, Williams and Lloyd Company Dept. A Dept. B Dept. c Total Depts. A & C Only Net sales Cost of goods sold S Gross profit Departmental direct operating margin Indirect operating expenses Operating income (loss) $70,000 40,000 $30,000 $30,000 35,000 $(5,000) $50,000 40,000 $ 10,000 $150,000 115,000 $ 35,000 Required: 1. Prepare an additional column that combines departments A and Conly. Use a minus sign to indicate an operating loss. Williams and Lloyd Company Dept. A Dept. B Dept. c Total Depts. A & C Only Net sales Cost of goods sold $ $ $ Gross profit Direct operating expenses Departmental direct operating margin $ Indirect operating expenses Operating income (loss) 2. Based on the data given in the part 1, which of the following is true? Williams and Lloyd Company Dept. A Dept. B Dept. c Total Depts. sales $ st of goods sold oss profit $ irect operating expenses Departmental direct operating margin $ If department A is eliminated the total operating loss would be $5,000. If department C is eliminated the total operating loss would be $25,000. If department B is eliminated the total operating income would be $40,000. 2. If department B is eliminated the total operating income would be $5,000