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Rooney Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. ROONEY COMPANY Income Statements for Year 2 Segment Sales Cost of goods sold Sales commissions Contribution margin General fixed operating expenses (allocation of president's salary) Advertising expense (specific to individual divisions) Net income (loss) A $ 170,000 (130,000) (17,000) 23,000 (40,000) (4,000) $ (21,000) B $ 238,000 (89,000) (22,000) 127,000 (37,000) (19,000) $ 71,000 $255,000 (94,000) (32,000) 129,000 (28,000) 0 $101,000 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. Required A Required B Prepare a schedule of relevant sales and costs for Segment A. Relevant Rev. and Cost items for Segment A Effect on income Required A 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. ROONEY COMPANY Comparative Income Statements for the Year 2 Keep Seg. A Eliminate Seg. A Decision Sales Cost of goods sold Sales commissions Contribution margin General fixed operating expenses Advertising expense Net Income

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