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Buckley Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. BUCKLEY COMPANY Income Statements for Year 2 Segment A   B   C Sales $ 330,000     $ 480,000     $ 500,000   Cost of goods sold   (242,000 )     (184,000 )     (190,000 ) Sales commissions   (30,000 )     (44,000 )     (44,000 ) Contribution margin   58,000       252,000       266,000   General fixed operating expenses (allocation of president’s salary)   (92,000 )     (92,000 )     (92,000 ) Advertising expense (specific to individual divisions)   (6,000 )     (20,000 )     0   Net income (loss) $ (40,000 )   $ 140,000     $ 174,000     Required Prepare a schedule of relevant sales and costs for Segment A. Prepare comparative income statements for the company as a whole under two alternatives: (1) the retention of Segment A and (2) the elimination of Segment A. Options for required A table are: Advertising Expense, Cost of Goods Sold, General Fixed Operating Expenses, Sales, Sale Commision

Buckley Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. BUCKLEY COMPANY Income Statements for Year 2 Segment A   B   C Sales $ 330,000     $ 480,000     $ 500,000   Cost of goods sold   (242,000 )     (184,000 )     (190,000 ) Sales commissions   (30,000 )     (44,000 )     (44,000 ) Contribution margin   58,000       252,000       266,000   General fixed operating expenses (allocation of president’s salary)   (92,000 )     (92,000 )     (92,000 ) Advertising expense (specific to individual divisions)   (6,000 )     (20,000 )     0   Net income (loss) $ (40,000 )   $ 140,000     $ 174,000     Required Prepare a schedule of relevant sales and costs for Segment A. Prepare comparative income statements for the company as a whole under two alternatives: (1) the retention of Segment A and (2) the elimination of Segment A. Options for required A table are: Advertising Expense, Cost of Goods Sold, General Fixed Operating Expenses, Sales, Sale Commision

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter2: Basic Managerial Accounting Concepts
Section: Chapter Questions
Problem 1MCQ: Accumulating costs means that a. costs must be summed and entered on the income statement. b. each...
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Buckley Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated.

BUCKLEY COMPANY
Income Statements for Year 2
Segment A   B   C
Sales $ 330,000     $ 480,000     $ 500,000  
Cost of goods sold   (242,000 )     (184,000 )     (190,000 )
Sales commissions   (30,000 )     (44,000 )     (44,000 )
Contribution margin   58,000       252,000       266,000  
General fixed operating expenses (allocation of president’s salary)   (92,000 )     (92,000 )     (92,000 )
Advertising expense (specific to individual divisions)   (6,000 )     (20,000 )     0  
Net income (loss) $ (40,000 )   $ 140,000     $ 174,000  
 


Required

  1. Prepare a schedule of relevant sales and costs for Segment A.

  2. Prepare comparative income statements for the company as a whole under two alternatives: (1) the retention of Segment A and (2) the elimination of Segment A.

Options for required A table are: Advertising Expense, Cost of Goods Sold, General Fixed Operating Expenses, Sales, Sale Commision 

Required A Required B Prepare comparative income statements for the company as a whole and (2) the elimination of Segment A. BUCKLEY COMPANY Comparative Income Statements for the Year 2 Keep Seg. A Decision Sales Cost of goods sold Sales commissions Contribution margin General fixed operating expenses Advertising expense Net Income $ 0 Eliminate Seg. A 0 $ 0 O
Transcribed Image Text:Required A Required B Prepare comparative income statements for the company as a whole and (2) the elimination of Segment A. BUCKLEY COMPANY Comparative Income Statements for the Year 2 Keep Seg. A Decision Sales Cost of goods sold Sales commissions Contribution margin General fixed operating expenses Advertising expense Net Income $ 0 Eliminate Seg. A 0 $ 0 O
Required A Required B Prepare a schedule of relevant sales and costs for Segment A. Relevant Rev. and Cost items for Segment A Sales Effect on income
Transcribed Image Text:Required A Required B Prepare a schedule of relevant sales and costs for Segment A. Relevant Rev. and Cost items for Segment A Sales Effect on income
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