1. A company expects its three departments to yield the following income for next year:
Dept. X Dept. Y Dept. Z
Sales $94,000 $15,000 $70,000
Expenses
Avoidable 71,000 2,000 52,000
Unavoidable 4,000 7,000 20,000
Total expenses 75,000 9,000 72,000
Net income (loss) $19,000 $6,000 $(2,000)
Required: Compute the following independent calculations:
a. The effect on total company income if Dept. X is eliminated.
b. The effect on total company income if Dept. Y is eliminated.
c. The effect on total company income if Dept. Z is eliminated.
d. Should any of these departments be eliminated? Why of why not?