Mini case - Relevant Cost

Saul's Company's management is trying to decide whether to eliminate Department Z, which has produced low profits or losses for several years. The company's 2014 departmental income statement attached.

Required

1. Prepare a three-column report that lists items and amounts for (a) the company's total expenses (including cost of goods sold)-in column 1, (b) the expenses that would be eliminated by closing Department Z-in column 2, and (c) the expenses that will continue-in column 3.

2. Prepare a forecasted annual income statement for the company reflecting the elimination of Department Z assuming that it will not affect Department A's sales and gross profit. The statement should reflect the reassignment of the office worker to one-half time as a salesclerk.

Attachment:- Case.rar