Using a responsibility income statement
Shown below is the current monthly income statement of Metro Video,by profit centers: On the basis of this information,compute the increase in monthly income from operations that may be expected to result from each of the following actions:
(a)Spending $5,000 per month in advertising is expected to increase sales in the Equipment Sales Department by 35%.$________________
(b)Closing the Equipment Sales Department and allowing the Video Rentals Department to expand is expected to increase the revenue of the Video Rentals Department by $105,000 per month.This action also is expected to increase fixed costs traceable to the Video Rentals Department by $40,000 per month.$_______________

Question

Using a responsibility income statement
Shown below is the current monthly income statement of Metro Video,by profit centers:  On the basis of this information,compute the increase in monthly income from operations that may be expected to result from each of the following actions:
(a)Spending $5,000 per month in advertising is expected to increase sales in the Equipment Sales Department by 35%.$________________
(b)Closing the Equipment Sales Department and allowing the Video Rentals Department to expand is expected to increase the revenue of the Video Rentals Department by $105,000 per month.This action also is expected to increase fixed costs traceable to the Video Rentals Department by $40,000 per month.$_______________

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The Answer of Using a responsibility income statement
Shown below is the current monthly income statement of Metro Video,by profit centers:  On the basis of this information,compute the increase in monthly income from operations that may be expected to result from each of the following actions:
(a)Spending $5,000 per month in advertising is expected to increase sales in the Equipment Sales Department by 35%.$________________
(b)Closing the Equipment Sales Department and allowing the Video Rentals Department to expand is expected to increase the revenue of the Video Rentals Department by $105,000 per month.This action also is expected to increase fixed costs traceable to the Video Rentals Department by $40,000 per month.$_______________

Using a Responsibility Income Statement