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Suresh Co. expects its five departments to yield the following income for next year.

Recompute and prepare the departmental income statements (including a combined total column) for the company under each of the following separate scenarios.

(2) Management eliminates departments with sales dollars that are less than avoidable expenses.

Dept. M Dept. N Dept. O Dept. P Dept. T Total Sales $ 63,000 $ 35,000 $ 56,000 $ 42,000 $ 28,000 $ 224,000 Expenses Avoidable 9,800 36,400 22,400 14,000 37,800 $ 120,400 Unavoidable 51,800 12,600 4,200 29,400 9,800 $ 107,800 Total expenses 61,600 49,000 26,600 43,400 47,600 228,200 Net income (loss) $ 1,400 $ (14,000 ) $ 29,400 $ (1,400 ) $ (19,600 ) $ (4,200 )

Explanation / Answer

Recompute and prepare the departmental income statements (including a combined total column) for the company under each of the following separate scenarios.

Dept M Dept N Dept O Dept P Dept T Total Sales 63000 0 56000 42000 0 161000 Expenses Avoidable 9800 0 22400 14000 0 46200 Unavoidable 51800 12600 4200 29400 9800 107800 Total expense 61600 12600 26600 43400 9800 154000 Net income (loss) 1400 -12600 29400 -1400 -9800 7000

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