WHETHER TO DISCONTINUE A DEPARTMENT Williams and Lloyd Company is trying to decide whether to discontinue department
Question:
WHETHER TO DISCONTINUE A DEPARTMENT Williams and Lloyd Company is trying to decide whether to discontinue department B. Operating results for the year just ended for each of the company's three departments and for the entire operation are as follows:
REQUIRED
1. Prepare an additional column that combines departments A and C only.
2. Review all data and decide if department B should be discontinued. Defend yourdecision.
Transcribed Image Text:
Dept. A Dept. C $290,000 Dept. B Total Net sales Cost of goods sold Gross profit Direct operating expenses Departmental direct operating margin Indirect operating expenses Operating income (loss) $380,000 $260,000 140,000 $930,000 210,000 160,000 $130,000 510,000 $170,000 100,000 $120,000 $420,000 90,000 80,000 270,000 $ 70,000 $ 30,000 35,000 $ (5,000) $ 50,000 $150,000 40,000 $ 10,000 40,000 $ 30,000 115,000 $ 35,000
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1 2 If department B is eliminated total operating income will be reduced from 35000 to 5000 Th...View the full answer
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