A Portion of the Divisional Income Statement for the Year

question 95

Essay

A portion of the divisional income statement for the year just ended is presented below in a condensed form.
$\begin{array}{ll}\text { Department F }\\\$ 93,800 & \text { Net sales } \\ \underline{72,400 }& \text { Cost of goods sold } \\\$ 21,400 & \text { Grossprofit } \\ \underline{ 28,900} & \text { Operating expenses } \\ \underline{\$(7,500)} & \text { Loss from operations }\end{array}$ The operating expenses of Department F include $16,000 for direct expenses.
It is estimated that the discontinuance of Department F would not have affected the sales of the other departments nor have reduced the indirect expenses of the business. Assuming the accuracy of these estimates, determine the effect (increase or decrease and the amount) on the income from operations of the business if Department F had been discontinued.

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Definitions:

Loss of Balance

A disturbance that causes individuals to feel unsteady, dizzy or have a difficulty in maintaining the body's natural equilibrium.

Oval Window

A membrane-covered opening that leads from the middle ear to the inner ear and is involved in the process of hearing.

Eardrum

A thin membrane that separates the outer ear from the middle ear and vibrates in response to sound waves.

Vestibular Sacs

Structures in the inner ear involved in maintaining balance and spatial orientation by detecting gravity and linear movement.