[The following information applies to the questions displayed below, Suresh Co.

Question

[The following information applies to the questions displayed below, Suresh Co. expects its five departments to yleld the following Income for next yean Dept O Total Dept. N $ 43,500 17000 Dept. T 14,300 $144,800 Dept. M Dept P $36,500 33,500 Sales Expenses Avoldable Unavoldable 4,500 25,000 13,200 6,600 10,400 2,500 7,000 16,000 18,200 53,300 4,900 $55,000 Total expenses 29,500 19,800 12,900 23,000 23100 108,300 Net Income (loss) 14,000 $(2,800) $23,600 10,500 $(8,800 36,500 Recompute and prepare the departmental Income statements (Including a combined total column) for the company under each of the following separate scenarlos. value: 10.00 points (1) Management eliminates departments with expected net losses DEPARTMEN ITH NE Dept. M Dept. N Dept. O Dept. P Dept. T Total Sales Expenses Avoidable Unavoidable Total expenses Net income (loss)

Explanation / Answer

DEPARTMENTS WITH EXPECTED NET LOSSES ELIMINATED Dept. M Dept. N Dept. O Dept. P Dept. T Total Sales 43500 36500 33500 113500 Expenses: 0 Avoidable 4,500 10,400 7000 21900 Unavoidable 25,000 6,600 2,500 16,000 4,900 55000 Total expenses 29,500 6,600 12,900 23,000 4,900 76900 Net income (loss) 14,000 -6,600 23,600 10,500 -4,900 36600 DEPARTMENTS WITH LESS SALES THAN AVOIDABLE EXPENSES ELIMINATED Dept. M Dept. N Dept. O Dept. P Dept. T Total Sales 43500 17000 36500 33500 130500 Expenses: 0 Avoidable 4,500 13200 10,400 7,000 35100 Unavoidable 25,000 6,600 2,500 16,000 4,900 55000 Total expenses 29,500 19,800 12,900 23,000 4,900 90100 Net income (loss) 14,000 -2,800 23,600 10,500 -4,900 40400

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