Answer and Explanation:
The re-computation and prepare the departmental income statements is shown below:-
Department N and T has sales dollar lower than Avoidable expenses, therefore those department will be eliminated. Also Unavoidable expenses will be occurs.
Department with less sales than avoidable expenses eliminated
Dept M Dept N Dept O Dept P Dept T Total
Sales $63,000 $0 $56,000 $42,000 $0 $161,000
Expenses
Avoidable: $9,800 $0 $22,400 $14,000 $0 $46,200
Unavoidable $51,800 $12,600 $4,200 $29,400 $9,800 $107,800
Total
expenses $61,600 $12,600 $26,600 $43,400 $9,800 $107,800
Net income
(loss) $1,400 ($12,600) $29,400 ($1,400) ($9,800) $7,000
