Thornton Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. Segment Sales Cost of goods sold Sales commissions THORNTON COMPANY Income Statements for Year 2 Contribution margin General fixed operating expenses (allocation of president's salary) Advertising expense (specific to individual divisions) Net Income (loss) $ 163,000 (127,000) (19,000) 17,000 (37,000) (5,000) B $254,000 $259,000 (79,000) (31,000) 144,000 (34,000) (17,000) $ (25,000) $ 93,000 (85,000) (24,000) 150,000 (43,000) $107,000 Required a. Prepare a schedule of relevant sales and costs for Segment A b. 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

Thornton Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. Segment Sales Cost of goods sold Sales commissions THORNTON COMPANY Income Statements for Year 2 Contribution margin General fixed operating expenses (allocation of president's salary) Advertising expense (specific to individual divisions) Net Income (loss) $ 163,000 (127,000) (19,000) 17,000 (37,000) (5,000) B $254,000 $259,000 (79,000) (31,000) 144,000 (34,000) (17,000) $ (25,000) $ 93,000 (85,000) (24,000) 150,000 (43,000) $107,000 Required a. Prepare a schedule of relevant sales and costs for Segment A b. 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

Financial & Managerial Accounting

14th Edition

ISBN:9781337119207

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter23: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 1ADM

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