A Company Expects Its Three Departments to Yield the Following

question 96

Essay

A company expects its three departments to yield the following income for next year:
$\begin{array}{lrrr}& \text { Dept. X } & \text { Dept. Y } & \text { Dept. Z } \\\text { Sales } & \$ 94,000 & \$ 15,000 & \$ 70,000 \\\text { Expenses } \\\text { Avoidable } & 71,000 & 2,000 & 52,000 \\\text { Unavoidable } & 4,000 & 7,000 & 20,000 \\\hline \text { Total expenses } & 75,000 & 9,000 & 72,000 \\\hline\text { Net income(loss) } & \underline {\$ 19,000} & \underline {\$ 6,000} &\underline { \$(2,000)}\end{array}$ 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?

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Definitions:

Exact Interest

A redefined term referring to the method of calculating interest based on a 365-day year, highlighting the precision in financial computations.

365-Day Year

A calendar year consisting of 365 days, not accounting for leap years which have 366 days.

Total Amount

The full sum resulting from the addition of all parts, quantities, or figures.

Exact Interest

A method of calculating interest using a 365-day year or actual number of days in a loan's term, leading to a more precise interest calculation.