User Account

All Pages

Explain the effect on profitability if segment a eliminated

Assignment Help Accounting Basics
Reference no: EM13977500

Segment elimination decision

Lockett Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated.

LOCKETT COMPANY

Income Statements for the Year 2009

Segment

A

B

C

Sales

$191,000

$251,000

$347,000

Cost of goods sold

(147,000)

(99,000)

(200,000)

Sales commissions

(19,000)

(36,000)

(24,000)

Contribution margin

25,000

116,000

123,000

General fixed oper. exp. (allocation of president's salary)

(45,000)

(51,000)

(46,000)

Advertising expense (specific to individual divisions)

(4,000)

(8,000)

0

Net income

($24,000)

$57,000

$77,000

Required

a. Explain the effect on profitability if Segment A is eliminated.

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: EM13977500

Questions Cloud

Why you agree or disagree with the following proposition : Explain why you agree or disagree with the following proposition: "Corporations will be less likely to act in socially responsible ways if there is either too much, or too little competition."
Explain why warranty service represents an increased cost : Instructions:  Answer only two questions below. You must answer question 1; you may choose only one question from Question 2, 3, or 4. NO EXTRA CREDIT is available. Your response should be about 2-3 paragraphs for question 1 and 1-2 paragraphs for qu..
What is the thinnest film of oil : What is the thinnest film of oil (index of refraction 1.40) floating on water in which green light (λ= 500 nm in air) is essentially eliminated by destructive interference from a beam of white light incident normally on this film?
Write a personal code of conduct : Write a personal code of conduct (sometimes called a personal code of ethics) that you would pass along to your staff. Explain how you would communicate your personal code of conduct across the organization
Explain the effect on profitability if segment a eliminated : 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.
Company to outsource their purchasing function : As a continuation of the story described in Case One, Jackson Excursions (JE) decides that it is the best interest of their company to outsource their purchasing function to a third-party in Louisiana, Jones Procurement. Sonny Jackson has been handli..
Calculate the force exerted by earth on the mass : A 1.7 kg mass is located inside the Earth half way between the center and the surface. Calculate the force exerted by Earth on the mass, assuming the density of Earth is the same through out the whole Earth.
What is the thinnest film of a coating : What is the thinnest film of a coating with n = 1.42 on glass (n = 1.52) for which destructive interference of the red component (wavelength = 650 nm) of an incident white light beam in air can take place by reflection?
Lifetimes of two brands of penlight batteries : Comparing the lifetimes of two brands of penlight batteries, a researcher has randomly selected 10  batteries of brand A and 10 of brand B, then subjected each battery to the same usage test.

Reviews

Write a Review

Accounting Basics Questions & Answers

  On what date does this note mature

Keshena Co. borrows $240,000 cash on November 1, 2009, by signing a 180-day, 10% note with a face value of $240,000. On what date does this note mature?

  Write a report on internal controls

Write a report on Internal Controls

  Audit report modifications

Complete problem below. List a represents the types of opinions the auditor ordinarily would issue and List B represents the report modifications [if any] that would be necessary. Select as the best answer for each situation [items 1 to 6] the typ..

  Chang corp had 500000 shares of common stock outstanding

chang corp. had 500000 shares of common stock outstanding. during 2012 it had the following transactions that affected

  A recent purchase of merchandise

LBJ Company recorded the following events involving a recent purchase of merchandise.

  Briefly describe the steps j j should take to report

Briefly describe the steps J J should take to report the change

  Comment on the business economic, financial

Using the information you have learned from this course about various risks, identify the accounts or transactions that would be considered to have a significant risk of material misstatement.

  Lifo versus fifo-impact on roi natco inc uses the fifo

lifo versus fifo-impact on roi. natco inc. uses the fifo inventory cost-flow assumption. in a year of rising costs and

  Identify the relative strengths

Identify the relative strengths

  What is the change in the number of days sales

What is the change in the number of days sales uncollected between years 2010 and 2011? According to this analysis, is the company's collection of receivables improving?

  What is the casualty loss amount

Assume Victor will itemize deductions in 2010 (and that this was Victor's only personal casualty). What is the casualty loss amount that Victor may actually deduct on his return?

  Explain the steps in completing the accounting cycle how

what are the steps in completing the accounting cycle? how do the different steps affect the financial statements? what

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd