Franklin Company operates three segments. Income statements for the segments imply that profitability could beimproved if Segment A were eliminated.FRANKLIN COMPANYIncome Statements for Year 2SegmentSalesCost of goods soldSales commissionsABC$ 167,000$ 241,000$ 245,000(128,000 )(90,000)(19,000)(23,000)(79,000)(22,000)128,000144,000(38,000 )(39,000)(35,000 )(3,000 )(18,000 )0$ (21,000)$ 71,000$ 109,000Contribution marginGeneral fixed operating expenses (allocation ofpresident's salary)Advertising expense (specific to individual divisions)20,000Net income (loss)RequiredPrepare 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 SegmentA and (2) the elimination of Segment A.

An income statement helps in analyzing where to increase the revenue and decrease the cost to…

Franklin Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. FRANKLIN COMPANY Income Statements for Year 2 Segment Sales A B C $ 167,000 $ 241,000 Cost of goods sold (128,000 ) (90,000 ) Sales commissions Contribution margin (19,000 ) (23,000) $ 245,000 (79,000) (22,000) 20,000 128,000 144,000 General fixed operating expenses (allocation of president's salary) (38,000 ) (39,000) (35,000) Advertising expense (specific to individual divisions) (3,000 ) (18,000 ) 0 Net income (loss) $ (21,000 ) $ 71,000 $ 109,000 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.

Franklin Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. FRANKLIN COMPANY Income Statements for Year 2 Segment Sales A B C $ 167,000 $ 241,000 Cost of goods sold (128,000 ) (90,000 ) Sales commissions Contribution margin (19,000 ) (23,000) $ 245,000 (79,000) (22,000) 20,000 128,000 144,000 General fixed operating expenses (allocation of president's salary) (38,000 ) (39,000) (35,000) Advertising expense (specific to individual divisions) (3,000 ) (18,000 ) 0 Net income (loss) $ (21,000 ) $ 71,000 $ 109,000 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.

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter9: Metric-analysis Of Financial Statements

Section: Chapter Questions

Problem 9.2.1P

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