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Suresh Co. expects its five departments to yield the following income for next year.

	Dept. M				Dept. N					Dept. O				Dept. P					Dept. T					Total
Sales		$	63,000			$	35,000				$	56,000			$	42,000				$	28,000			$	224,000
Expenses
Avoidable			9,800				36,400					22,400				14,000					37,800			$	120,400
Unavoidable			51,800				12,600					4,200				29,400					9,800			$	107,800
Total expenses			61,600				49,000					26,600				43,400					47,600				228,200
Net income (loss)		$	1,400			$	(14,000	)			$	29,400			$	(1,400	)			$	(19,600	)		$	(4,200	)

Recompute and prepare the departmental income statements (including a combined total column) for the company under each of the following separate scenarios.

(2) Management eliminates departments with sales dollars that are less than avoidable expenses.

Answer 1

• Requirement 2

Dept N and Dept T have sales dollars less than avoidable expenses and will be eliminated.

	Dept M	Dept N	Dept O	Dept P	Dept T	Total
Sales	$63,000	$0	$56,000	$42,000	$0	$161,000
Expenses:
Avoidable	$9,800	$0	$22,400	$14,000	$0	$46,200
Unavoidable	$51,800	$12,600	$4,200	$29,400	$9,800	$107,800
Total expenses	$61,600	$12,600	$26,600	$43,400	$9,800	$154,000
Net Income (loss)	$1,400	($12,600)	$29,400	($1,400)	($9,800)	$7,000