7-20 7-27 22 7-27 7-27 7-28 7-29 7-35 7-37 7-38 7-39 8-1 9-1 P7-5 (LO 6), AN Brislin Company has four operating divisions. During the first quarter of 2022, the company reported aggregate income from operations of $213,000 and the following divisional results. Sales Cost of goods sold Selling and administrative expenses Income (loss) from operations I $250,000 200,000 75,000 $(25,000) Analysis reveals the following percentages of variable costs in each division. Division Cost of goods sold Selling and administrative expenses II III IV $200,000 $500,000 $450,000 192,000 300,000 250,000 60,000 60,000 50,000 $(52,000) $140,000 $150,000 III 80% II I 70% 90% 60 40 50 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 (I and II). Consensus is that one or both of the divisions should be discontinued. Instructions a. Compute the contribution margin for Divisions I and II. a. Contribution margin I $80,000 b. Prepare an incremental analysis concerning the possible discontinuance of (1) Division I and (2) Division II. What course of action you recommend for each division? do IV 75% 60 c. Prepare a columnar condensed income statement for Brislin Company, assuming Division II is eliminated. (Use the CVP format.) Division II's unavoidable fixed costs are allocated equally to the continuing divisions. c. Income III $132,800units d. Reconcile the total income from operations ($213,000) with the total income from operations without Division II.
7-20 7-27 22 7-27 7-27 7-28 7-29 7-35 7-37 7-38 7-39 8-1 9-1 P7-5 (LO 6), AN Brislin Company has four operating divisions. During the first quarter of 2022, the company reported aggregate income from operations of $213,000 and the following divisional results. Sales Cost of goods sold Selling and administrative expenses Income (loss) from operations I $250,000 200,000 75,000 $(25,000) Analysis reveals the following percentages of variable costs in each division. Division Cost of goods sold Selling and administrative expenses II III IV $200,000 $500,000 $450,000 192,000 300,000 250,000 60,000 60,000 50,000 $(52,000) $140,000 $150,000 III 80% II I 70% 90% 60 40 50 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 (I and II). Consensus is that one or both of the divisions should be discontinued. Instructions a. Compute the contribution margin for Divisions I and II. a. Contribution margin I $80,000 b. Prepare an incremental analysis concerning the possible discontinuance of (1) Division I and (2) Division II. What course of action you recommend for each division? do IV 75% 60 c. Prepare a columnar condensed income statement for Brislin Company, assuming Division II is eliminated. (Use the CVP format.) Division II's unavoidable fixed costs are allocated equally to the continuing divisions. c. Income III $132,800units d. Reconcile the total income from operations ($213,000) with the total income from operations without Division II.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:7-20
7-27
22
7-27
7-27
7-28
7-29
7-35
7-37
7-38
7-39
8-1
9-1
P7-5 (LO 6), AN Brislin Company has four operating divisions. During the first quarter of 2022, the company reported aggregate
income from operations of $213,000 and the following divisional results.
Sales
Cost of goods sold
Selling and administrative expenses
Income (loss) from operations
I
$250,000
200,000
75,000
$(25,000)
Analysis reveals the following percentages of variable costs in each division.
Division
Cost of goods sold
Selling and administrative expenses
II
III
IV
$200,000 $500,000 $450,000
192,000
300,000
250,000
60,000
60,000
50,000
$(52,000)
$140,000
$150,000
III
80%
II
I
70% 90%
60
40
50
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 (I and II). Consensus is that one or both of the divisions should be
discontinued.
Instructions
a. Compute the contribution margin for Divisions I and II.
a. Contribution margin I $80,000
b. Prepare an incremental analysis concerning the possible discontinuance of (1) Division I and (2) Division II. What course of action
you recommend for each division?
do
IV
75%
60
c. Prepare a columnar condensed income statement for Brislin Company, assuming Division II is eliminated. (Use the CVP format.)
Division II's unavoidable fixed costs are allocated equally to the continuing divisions.
c. Income III $132,800units
d. Reconcile the total income from operations ($213,000) with the total income from operations without Division II.
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