Jackson Brothers Instruments Sells Stringed Instruments

question 6

Essay

Jackson Brothers Instruments sells stringed instruments.Trent Jackson, the company's president, just received the following income statement reporting the results of the past year. Trent is concerned that two of the company's divisions are showing a loss, and he wonders if the company should stop selling Banjos and Fiddles to concentrate solely on guitars.
Required:
a.Prepare a segment margin income statement.Omit the heading.Fixed cost of goods sold and fixed operating expenses can be traced to each division.
b.Should Trent close the banjos and fiddles divisions? Why or why not?
c.Trent wants to change the allocation method used to allocate common fixed costs to the divisions.His plan is to allocate these costs based on sales revenue.Will this new allocation method change your decision on whether to close the guitars and fiddles divisions? Why or why not?

---

Definitions:

Estrogen

A group of steroid hormones that play an essential role in the development and maintenance of female characteristics and reproductive processes.

Corpus Luteum

A temporary endocrine structure in female ovaries that produces hormones, primarily progesterone, following ovulation.

Zona Pellucida

The thick, transparent covering that surrounds the plasma membrane of a mammalian ovum.

Uterine Wall

The muscular layer of the uterus, crucial for menstrual cycles and expanding during pregnancy to accommodate a growing fetus.