Henry Company operates three segments. Income statements for the segments imply that Henry could improve profitability by eliminating Segment X.

Required
a. Explain the effect on Henry€™s profitability if Segment X is eliminated.
b. Prepare comparative income statements for the company as a whole under the two alternatives:
(1) Segment X is retained
(2) Segment X iseliminated.

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HENRY COMPANY Income Statement For the Year 2014 Segment Sales Cost of goods sold Sales commissions Contribution margin General fixed oper. exp. (allocation of president's salary) Advertising expense (specific to individual segments) Net income 92,000 $250,000 $200,000 3,000) (82,000 (85,000) 13,000 22,000) 20,000) 95,000 0,000) (20,000) (20,000) 3,000) 8,000 0 $108,000 75,000 6,000 146,000 17,000)