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

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Patterson 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 PATTERSON COMPANY Income Statements for the Year 2014 B $165,000 $240,000 $250,000 (121,000) (92,000) (95,000) (15,000) (22,000) (22,000) 29,000 126,000 133,000 (44,000) (44,000) (52,000) Contribution margin General fixed oper. exp. (allocation of president's salary) Advertising expense (specific to individual divisions) Net income (3,000) (10,000) 0 $ (18,000) $ 64,000 $ 89,000 Required 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. PATTERSON COMPANY Comparative Income Statements for the Year 2014 Decision Keep Segment Eliminate Segment A Sales Cost of goods sold Sales commissions Contribution margin General fixed operating expenses Advertising expense 0 0 Net Income $ 0 $ 0

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