Problem 13-26A (Algo) Eliminating a segment LO 13-4 Munoz Boot Co. sells men's, women's, and children's boots. For each type of boot sold, it operates a separate department that has its own manager. All departments are housed in a single store. In recent years, the children's department has operated at a net loss and is expected to continue to do so. Last year's income statements follow. Sales Cost of goods sold Gross margin Sales commissions Women's Department $ 500,000 (180,400) Children's Department $ 200,000 (101,875) 98,125 (31,000) (32,900) Men's Department $680,000 (270,500) 409,500 319,600 Department manager's salary (62,000) (51,000) (116,200) (85,600) Rent on store lease (31,000) (31,000) (31,000) Store utilities Net income (loss) (14,000) $186,300 (14,000) (14,000) $ 138,000 $ (10,775) Required a. Calculate the contribution to profit. Determine whether to eliminate the children's department. b-1. Calculate the net income for the company as a whole with the children's department. b-2. Confirm the conclusion you reached in Requirement a by preparing income statements for the company without the children's department. c. Eliminating the children's department would increase space available to display men's and women's boots. Suppose management estimates that a wider selection of adult boots would increase the store's net earnings by $42,000. Would this information affect the decision that you made in Requirement a? Complete this question by entering your answers in the tabs below. Required A Required B1 Required 82 Required C Calculate the contribution to profit. Determine whether to eliminate the children's department. < Prev 3 of 3 Next