Using a Responsibility Income Statement

Essay

Using a responsibility income statement
Shown below is the current monthly income statement of Metro Video,by profit centers:
METRO VIDEO
Income Statement by Profit Centers
For the Month Ended April 30,20__
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 $40,000 per month.$________