Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. munoz company operates three segments. income stat

Munoz Company operates three segments. Income statements for the segments imply that profitability could be...

60.1K

Verified Solution

Question

Accounting

Munoz Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated.

MUNOZ COMPANY
Income Statements for Year 2
Segment A B C
Sales $ 167,000 $ 249,000 $ 247,000
Cost of goods sold (126,000 ) (86,000 ) (93,000 )
Sales commissions (23,000 ) (29,000 ) (24,000 )
Contribution margin 18,000 134,000 130,000
General fixed operating expenses (allocation of presidents salary) (36,000 ) (47,000 ) (28,000 )
Advertising expense (specific to individual divisions) (3,000 ) (17,000 ) 0
Net income (loss) $ (21,000 ) $ 70,000 $ 102,000

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.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students