Answer:
Net income or (Loss) = $43,128
Explanation:
As per the data given in the question,
Elegant Decor Company
Forecasted annual income statement
Under plan to eliminate Department 200
Sales = $437,000
Cost of goods sold = $261,000
Gross profit = $176,000
Operating expense
Direct expenses:
Advertising = $15,500
Stores supplies used = $4,500
Depreciation- Stores Equipment = $4,200
Total Direct Expense = $24,200
Allocated Expenses :
Sales Salaries = $64,000
($104,000-2×$24,200+($31,200÷2) = $40,000)
(104,000-$40,000)
Rent Expenses = $14,180
Bad debt expense = $9,400
Office salary = $15,600
($31,200 - ($31,200 ÷ 2))
Insurance expense = $1,724
($2,200 - $476)
Miscellaneous expense = $3,728
($4,000 - $272)
Total Allocated Expenses = $108,632
Total Expense = $132,872
($108,632 + $24,200)
Net income or (Loss) = $43,128
($176,000 - $132,872)
