Using P6-28A (pg 236), show your computations and answer the questions presented by Niklos Boot Company

| March 29, 2017

Question
Thank you.

Using P6-28A (pg 236), show your computations and answer the questions presented by Niklos Boot Company management. Two Excel worksheets are provided for your input. The first is for your financial stmt analysis (confirmation provided if correct). Correct financial stmt entries are required to earn points. The second worksheet requires your explanation of management questions “a” and “c”. Provide complete commentary to earn points here.

Given Data P06-28A:
NIKLOS BOOT CO.
Income Statements

Sales
Cost of Goods Sold
Gross Margin
Department Manager’s Salary
Sales Commissions
Rent on Store Lease
Store Utilities
Net Income (Loss)

Men’s
Women’s
Children’s
Department Department Department
$
500,000 $
600,000 $
120,000
(210,000)
(250,000)
(70,000)
290,000
350,000
50,000
(52,000)
(60,000)
(24,000)
(86,000)
(98,000)
(18,000)
(21,000)
(21,000)
(21,000)
(4,000)
(4,000)
(4,000)
$
127,000 $
167,000 $
(17,000)

Additional information for Requirement C:
Estimated increase in earnings by eliminating Children’s Dept. $

20,000

Student Name:
Class:
Chp 6: Segment Elimination issues
Canvas H/W: P6-28A (pg 236)

1) Place your name and class period to the left.
2) Complete all part "b" computations before part "a".
3) For questions "a" & "c", clearly explain on worksheet #2.
4) Feel free to stop by during office hours with questions.
NIKLOS BOOT CO.

Note: Complete Part "b" FIRST, then complete Part "a" to confirm your understanding.
a.

Children’s
Department

Note: Add Excel formulas
for part "a" & "b" totals

Sales
Cost of Goods Sold
Gross Margin
Departmental Manager’s Salary
Sales Commissions
Contribution to Profit
Should the Children’s Dept be eliminated? Why or why not? Provide your commentary below (not here).

b.

Income Statements Before Elimination of Children’s Department

Sales
Cost of Goods Sold
Gross Margin
Department Manager’s Salary
Sales Commissions
Rent on Store Lease
Store Utilities
Net Income (loss)

Men’s
Women’s
Department Department
$
500,000
(210,000)
290,000
(52,000)
(86,000)
(21,000)
(4,000)
$
127,000
Correct!

Children’s
Department

Company
Total

Income Statements After Elimination of Children’s Department
Men’s
Department

Women’s
Department

Company
Total

Sales
Cost of Goods Sold
Gross Margin
Department Manager’s Salary
Sales Commissions
Rent on Store Lease
Store Utilities
Net Income (loss)

Part "A" question: Should the Children’s Dept be eliminated? Why or why not?
Explain/discuss on the worksheet provided below (not here).
c. Part "C" question: Would this new information affect the decision? Why/why not?

Explain/discuss on the worksheet
provided below (not here).

Acct 2220 Zeigler – P6-28A (pg 236) Explanation Requirement for Niklos Boot Co.
Clearly explain the results of your analysis for parts "a" & "c" below.
a. Should the Children’s Dept be eliminated? Why or why not?
Explain/Discuss your conclusion to this Part "a" question here.

c. Explain/Discuss your conclusion to the part "c" question.

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