Answer Happy

Suresh Co. expects its five departments to yield the following income for next year. Dept. M 567,000 Dept. N $ 37,800 Dept. T $ 32,888 Total 5242,800 Sales Expenses Avoidable Unavoidable Total expenses Net income (los) 11,800 53,400 65,200 $ 1,800 38,800 15,000 53,800 $(16,800) Dept. o $60,000 23,600 4,608 28, 200 531,800 Dept. P 546,080 16,000 31,800 47,809 5(1,880) 41,400 12,600 54,000 $(22,890) 131,600 117,488 249,000 5 (7,000) 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 S 0 Expenses Avoidable 0 Unavoidable 0 Total expenses Net Income (loss) 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 Depl. M Depl N Depto Dept. P Dept. T Total Sales Expenses Avoidable Unavoidable Total expenses Net income (oss)