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.

Question

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.

Quizplus · Accepted Answer

The Answer of 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.

A Portion of the Divisional Income Statement for the Year