The Green Shop sells plants, fertilizers, and other garden products. The store has three departments: plants, chemicals, and tools. Certain information about the revenues and expenses of the departments for the year ended December 31, 2019, follows. Indirect expenses have been allocated on bases similar to those discussed and illustrated in the text:

INSTRUCTIONS
1. Prepare a departmental income statement showing the contribution margin and the net profit for each department.
2. Based solely on accounting information, would you recommend that any departments be closed? Explain.
3. What information, other than accounting data, would you suggest the owners consider in deciding whether to close any departments?
Analyze: If the indirect expenses had been allocated on the basis of net sales, what conclusions would you draw about the viability of each department? Explain.

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Plants Chemicals Tools Allocated Indirect Expenses Direct Expenses Cost of Goods Sold Sales Sales Returns and Allowances $ 9,000 50,000 118,200 198,500 1,500 $1,000 3,000 5,900 14,750 $ 3,000 15,000 35,970 59,950 6,950 750