Question

Williams and Lloyd Company is trying to decide whether to discontinue department B. Operating results for the year just ended for each of the company's three departments and for the entire operation are shown.

	Dept. A		Dept. B		Dept. C		Total
Net sales		$379,000		$265,000		$287,000		$931,000
Cost of goods sold		205,000		150,000		155,000		510,000
Gross profit		$174,000		$115,000		$132,000		$421,000
Direct operating expenses		105,000		85,000		80,000		270,000
Departmental direct operating margin		$69,000		$30,000		$52,000		$151,000
Indirect operating expenses		40,000		35,000		38,000		113,000
Operating income (loss)		$29,000		$(5,000)		$14,000		$38,000

Required:

1. Prepare an additional column that combines departments A and C only:

Williams and Lloyd Company
	Dept. A	Dept. B	Dept. C	Total	Depts. A & C Only
Net sales	$379,000	$265,000	$287,000	$931,000	$ ????
Cost of goods sold	205,000	150,000	155,000	510,000	??????
Gross profit	$174,000	$115,000	$132,000	$421,000	$ ????
Direct operating expenses	105,000	85,000	80,000	270,000	????
Departmental direct operating margin	$69,000	$30,000	$52,000	$151,000	$ ????
Indirect operating expenses	40,000	35,000	38,000	113,000	???????
Operating income (loss)	$29,000	-$5,000	$14,000	$38,000	$ ??????

Answer 1

Answer-1)-

WILLIAMS AND LIOYD
PARTICULARS	DEPT.A	DEPT.B	DEPT.C	TOTAL	DEPT.A & C
	$	$	$	$	$
Net sales	379000	265000	287000	931000	666000
Less-Cost of goods sold	205000	150000	155000	510000	360000
Gross profit	174000	115000	132000	421000	306000
Less- Diret operating expenses	105000	85000	80000	270000	185000
Departmental direct opertaing margin	69000	30000	52000	151000	121000
Less- Indirect opertaing expenses	40000	35000	38000	113000	78000
Opertaing income (loss)	29000	-5000	14000	38000	43000