ABC, Inc, Is Segmented into Three Divisions and the Company Is

Essay

ABC, Inc., is segmented into three divisions and the company is concerned about the performance of Division Y.During your analysis of Division Y, you learn that $42,000 of the fixed expenses relate to general corporate expenses and had been allocated equally between the three divisions.
$\begin{array}{lcccc}&\text { Total Company } & \text { Division } \mathrm{X} & \text { Division } \mathrm{Y} & \text { Division } \mathrm{Z}\\ \text {Sales } &\$200,000&\$80,000&\$50,000&\$70,000\\ \text {Variable expenses } & \underline{120,000}& \underline{52,000}& \underline{30,000}& \underline{38,000}\\ \text { Contribution margin } &\$80,000&\$28,000&\$20,000&\$32,000\\ \text {Fixed expenses } & \underline{60,000}& \underline{20,000}& \underline{22,000}& \underline{18,000}\\ \text { Net income (loss) } & \underline{\$20,000}& \underline{\$8,000}& \underline{\$(2,000)}& \underline{\$14,000}\\ \text { } &\\\end{array}$
(a.)Calculate what the company's net income would be if Division Y were closed down.
(b.)Revise the income statement presented above into a more useful segmented income statement.