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Exercise 23-9 Analyzing income effects from eliminating departments LO P4 [The following information applies to the questions displayed below.] Suresh Co. expects its five departments to yield the following income for next year. Dept. M $79,000 Dept. N $ 41,000 Dept. o $72,000 Dept. 2 $60,000 Dept. T $ 40,000 Total $292,000 Sales Expenses Avoidable Unavoidable Total expenses Net income (loss) 15,800 56, 600 72,400 $ 6,600 43,600 19,800 63,400 $ (22,400) 20,000 5,400 25,400 $ 46,600 20,000 46,600 66,600 $ (6,600) 48,600 18,200 66, 800 $ (26,800) 148,000 146,600 294,600 $ (2,600) Recompute and prepare the departmental income statements (including a combined total column) for the company under each of the following separate scenarios. (1) Management eliminates departments with expected net losses. DEPARTMENTS WITH EXPECTED NET LOSSES ELIMINATED Dept. M Dept. N Dept. O Dept. P Dept. T Total Sales Expenses: Avoidable Unavoidable Total expenses Net income (loss) (2) Management eliminates departments with sales dollars that are less than avoidable expenses. DEPARTMENTS WITH LESS SALES THAN AVOIDABLE EXPENSES ELIMINATED Dept. M Dept. N Dept. O Dept. P Dept. T Total Sales Expenses: Avoidable Unavoidable Total expenses Net income (loss)

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