Please explain your answer in a bit of detail, as I'm trying to learn how to do the probelm as well as simply get the answer. A recent accounting graduate from Marvel State University evaluated the operating performance of Fanning Company's four divisions. The following presentation was made to Fanning's Board of Directors. During the presentation, the accountant made the recommendation to eliminate the Southern Division stating that total net income would increase by $60,000. (See analysis below.) Other Three Divisions Southern Division Total Sales $ 2,000,000 $ 480,000 $ 2,480,000 Cost of Goods Sold 950,000 400,000 1,350,000 Gross Profit 1,050,000 80,000 1,130,000 Operating Expenses 800,000 140,000 940,000 Net Income $ 250,000 $ (60,000 ) $ 190,000 For the other divisions, cost of goods sold is 80% variable and operating expenses are 70% variable. The cost of goods sold for the Southern Division is 30% fixed, and its operating expenses are 75% fixed. If the division is eliminated, only $15,000 of the fixed operating costs will be eliminated. Prepare the analysis for new accountant's recommendation. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g XXXXXXXXXXDo not leave any field blank. Enter 0 for the amounts.) Continue Eliminate Net Income Increase (Decrease) $ $ $ $ $ $

Please explain your answer in a bit of detail, as I'm trying to learn how to do the probelm as well as simply get the answer. A recent accounting graduate from Marvel State University evaluated the...

1 answer below »

Please explain your answer in a bit of detail, as I'm trying to learn how to do the probelm as well as simply get the answer.

A recent accounting graduate from Marvel State University evaluated the operating performance of Fanning Company's four divisions. The following presentation was made to Fanning's Board of Directors. During the presentation, the accountant made the recommendation to eliminate the Southern Division stating that total net income would increase by $60,000. (See analysis below.)

	Other Three Divisions		Southern Division	Total
Sales		$	2,000,000		$	480,000		$	2,480,000
Cost of Goods Sold			950,000			400,000			1,350,000
Gross Profit			1,050,000			80,000			1,130,000
Operating Expenses			800,000			140,000			940,000
Net Income		$	250,000		$	(60,000	)	$	190,000

For the other divisions, cost of goods sold is 80% variable and operating expenses are 70% variable. The cost of goods sold for the Southern Division is 30% fixed, and its operating expenses are 75% fixed. If the division is eliminated, only $15,000 of the fixed operating costs will be eliminated.

Prepare the analysis for new accountant's recommendation. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g XXXXXXXXXXDo not leave any field blank. Enter 0 for the amounts.)

	Continue		Eliminate		Net Income Increase (Decrease)
$		$		$








$		$		$

Answered Same Day Dec 24, 2021

Solution

David answered on Dec 24 2021

113 Votes

SOLUTION.PDF

Please explain your answer in a bit of detail, as I'm trying to learn how to do the probelm as well as simply get the answer. A recent accounting graduate from Marvel State University evaluated the...

Solution

Answer To This Question Is Available To Download

Related Questions & Answers

Submit New Assignment