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# Instructions Aggregate income from operations of \$213000 and the following divisional...

## Instructions

Aggregate income from operations of

\$213000

and the following divisional results.

Division

I

II

III

IV

Sales

\$250000

\$200000

\$500000

\$450000

Cost of goods sold

200000

192000

300000

250000

75000

60000

60000

50000

Income (loss) from operations

(\$25000)

(\$52000)

(\$140000)

(\$150000)

Analysis reveals the following percentages of variable costs in each division.

I

II

III

IV

Cost of goods sold

75%

90%

80%

75%

40%

70%

50%

60%

Discontinuance of any division would save

50%

of the fixed costs and expenses for that division.

Top management is very concerned about the unprofitable divisions (", F10," and ", G10,"). Consensus is that one or both of the divisions should be discontinued.

Instructions

:

(a) Compute the contribution margin for Divisions I and II.

 Division I Division II Sales Amount Amount Variable costs Cost of goods sold Formula Amount Selling and administrative Formula Amount Total variable expenses Formula Formula Total variable expenses Formula Formula Contribution margin Formula Formula

(b)(1) Prepare an incremental analysis concerning the possible discontinuance of Division I.

 Division I Continue Eliminate Net Income Increase (Decrease) Contribution margin (above) Formula Formula Formula Fixed costs Cost of goods sold Formula Formula Formula Selling and administrative Formula Formula Formula Total fixed expenses Formula Formula Formula Income (loss) from operations Formula Formula Formula

(b)(2) Prepare an incremental analysis concerning the possible discontinuance of Division II.

 Division II Continue Eliminate Net Income Increase (Decrease) Contribution margin (above) Amount Amount Formula Fixed costs Title Formula Formula Formula Title Formula Formula Formula Title Formula Formula Formula Title Formula Formula Formula

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 Grading Criteria Maximum Points Calculated the contribution margin for Divisions I and II. 20 Evaluated the incremental analysis concerning the possible discontinuance of Division I. 10 Evaluated the incremental analysis concerning the possible discontinuance of Division II. 10 Wrote in a clear, concise, and organized manner; demonstrated ethical scholarship in accurate representation and attribution of sources (i.e., APA); and displayed accurate spelling, grammar, and punctuation. 10 Total: 50

" >

 Aggregate income from operations of \$213000 and the following divisional results. Division I II III IV Sales \$250000 \$200000 \$500000 \$450000 Cost of goods sold 200000 192000 300000 250000 Selling and administrative expenses 75000 60000 60000 50000 Income (loss) from operations (\$25000) (\$52000) (\$140000) (\$150000) Analysis reveals the following percentages of variable costs in each division. I II III IV Cost of goods sold 75% 90% 80% 75% Selling and administrative expenses 40% 70% 50% 60% Discontinuance of any division would save 50% of the fixed costs and expenses for that division.

Top management is very concerned about the unprofitable divisions (", F10," and ", G10,"). Consensus is that one or both of the divisions should be discontinued.

Instructions

:

(a) Compute the contribution margin for Divisions I and II.

 Division I Division II Sales Amount Amount Variable costs Cost of goods sold Formula Amount Selling and administrative Formula Amount Total variable expenses Formula Formula Total variable expenses Formula Formula Contribution margin Formula Formula

(b)(1) Prepare an incremental analysis concerning the possible discontinuance of Division I.

 Division I Continue Eliminate Net Income Increase (Decrease) Contribution margin (above) Formula Formula Formula Fixed costs Cost of goods sold Formula Formula Formula Selling and administrative Formula Formula Formula Total fixed expenses Formula Formula Formula Income (loss) from operations Formula Formula Formula

(b)(2) Prepare an incremental analysis concerning the possible discontinuance of Division II.

 Division II Continue Eliminate Net Income Increase (Decrease) Contribution margin (above) Amount Amount Formula Fixed costs Title Formula Formula Formula Title Formula Formula Formula Title Formula Formula Formula Title Formula Formula Formula

Answered 1 days After Jun 20, 2023

## Solution

Mayuri answered on Jun 21 2023
SOLUTION.PDF