Suresh Co. expects its five departments to yield the following income for next year. ...
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Accounting
Suresh Co. expects its five departments to yield the following income for next year.
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.
(2) Management eliminates departments with sales dollars that are less than avoidable expenses.
Total Dept. N $64,000 36,000 Dept. M Dept. o Dept. P Dept. T $57,000 $43,000 29,000 $229,000 Sales Expenses Avoidable Unavoidable Total expenses 37,000 13,200 62,50050,200 10,300 52,200 14,500 30,000 27,000 44500 22,700 4,300 38,700 10,500 $123,200 $110,200 49,200 233,400 Net income (loss) $1,500 (14,200) $30,000 (1,500) $(20,200) (4,400) 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) 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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(2) Management eliminates departments with sales dollars that are less than avoidable expenses. 
