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Required information Skip to question [The following information applies to the questions displayed below.] Suresh Company reports the following segment (department) income results for the year. Department M Department N Department O Department P Department T Total Sales $ 74,000 $ 40,000 $ 67,000 $ 50,000 $ 35,000 $ 266,000 Expenses Avoidable 13,300 40,600 23,000 17,500 44,100 138,500 Unavoidable 54,600 16,800 4,900 39,100 14,700 130,100 Total expenses 67,900 57,400 27,900 56,600 58,800 268,600 Income (loss) $ 6,100 $ (17,400) $ 39,100 $ (6,600) $ (23,800) $ (2,600) b. Compute the total increase in income if the departments with sales less than avoidable costs, as identified in part a, are eliminated.

Sagot :

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a) The segmented income statements for Suresh Company are as follows:

                       Dept M     Dept N      Dept O       Dept P       Dept T    Total

Total Sales   $ 74,000 $ 40,000   $ 67,000  $ 50,000   $ 35,000 $266,000

Avoidable

 Expenses       13,300    40,600       23,000      17,500       44,100  138,500

Contribution $60,700      ($600)    $44,000   $32,500     ($9,100) $127,500

Unavoidable  54,600     16,800         4,900       39,100      14,700   130,100

Income (loss)  $6,100 $ (17,400)   $ 39,100    $ (6,600) $(23,800) $(2,600)

b) The computation of the total increase in income, if the departments with sales less than avoidable costs identified in part a are eliminated, is $9,700 ($7,100 + $2,600).

What is a segmented income statement?

A segmented income statement is an income statement that breaks down the revenues and expenses by business units, such as product line, location, department, salesperson, or territory.

Preparing segmented income statements helps management to:

  • Identify underperforming segments
  • Develop strategies for boosting profits.

Data and Calculations:

Segmented Income Statements before the elimination of Departments with sales less than avoidable costs:

                       Dept M     Dept N      Dept O       Dept P       Dept T    Total

Total Sales   $ 74,000 $ 40,000   $ 67,000  $ 50,000   $ 35,000 $266,000

Avoidable

 Expenses       13,300    40,600       23,000      17,500       44,100  138,500

Contribution $60,700      ($600)    $44,000   $32,500     ($9,100) $127,500

Unavoidable  54,600     16,800         4,900       39,100      14,700   130,100

Income (loss)  $6,100 $ (17,400)   $ 39,100    $ (6,600) $(23,800) $(2,600)

Segmented Income Statements after the elimination of Departments with sales less than avoidable costs:

                                        Dept M        Dept O        Dept P          Total

Total Sales                    $ 74,000    $ 67,000    $ 50,000    $191,000

Avoidable Expenses        13,300       23,000         17,500       53,800

Contribution Margin     $60,700     $44,000     $32,500    $137,200

Unavoidable Expenses  54,600         4,900         39,100      130,100

Income (loss)                   $6,100     $ 39,100     $ (6,600)       $7,100

Increase in income = $9,700 ($7,100 - ($2,600)

Learn more about segmented income statements at https://brainly.com/question/26800575

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