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 
Submission Guidelines:
Name your worksheet SU_ACC6345_W4_MW_LastName_FirstInitial.xlsx.
Submit your completed workbook to the
Midweek Assignment Submissions AreaÂ by
the due date assigned.
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
