Income statements for the segments imply that profitability

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Reference no: EM131285312

Patterson Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. PATTERSON COMPANY Income Statements for the Year 2014 Segment A B C Sales $ 165,000 $ 236,000 $ 248,000 Cost of goods sold (123,000 ) (88,000 ) (75,000 ) Sales commissions (16,000 ) (23,000 ) (31,000 ) Contribution margin 26,000 125,000 142,000 General fixed oper. exp. (allocation of president’s salary) (39,000 ) (45,000 ) (25,000 ) Advertising expense (specific to individual divisions) (6,000 ) (20,000 ) 0 Net income $ (19,000 ) $ 60,000 $ 117,000 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.

Reference no: EM131285312

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