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A Company Expects Its Three Departments to Yield the Following

question 96

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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 71,0002,00052,000 Unavoidable 4,0007,00020,000 Total expenses 75,0009,00072,000 Net income (loss) $19,000$6,000$(2,000)\begin{array}{llll} & \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\\\text { Total expenses } & 75,000 & 9,000 & 72,000 \\\text { Net income (loss) } & \$ 19,000 & \$ 6,000 & \$(2,000)\end{array}
Required: Compute the following independent calculations.
(1) The effect on total company income if Dept. X is eliminated.
(2) The effect on total company income if Dept. Y is eliminated.
(3) The effect on total company income if Dept. Z is eliminated.
(4) Should any of these departments be eliminated? Why of why not?

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