Brislin Company has four operating divisions. During the first quarter of 2020, the company reported aggregate income from operations of $216,400 and the following divisional results. Division IV Sales $250,000 $199,000 $499,000 $443,000 Cost of goods sold 204,000 189,000 297,000 246,000 Selling and administrative expenses 76,600 54,000 56,000 52,000 Income (loss) from operations $ (30,600) $ (44,000) $146,000 $145,000 Analysis reveals the following percentages of variable costs in each division. I || III IV Cost of goods sold 71 % 91 % 81 % 73 % Selling and administrative expenses 37 61 49 58 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 sho discontinued. (b2) Prepare an incremental analysis concerning the possible discontinuance of Division II. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Contribution margin Fixed costs Cost of goods sold Selling and administrative Total fixed expenses Income (loss) from operations Continue Eliminate Net Income Increase (Decrease) $

Brislin Company has four operating divisions. During the first quarter of 2020, the company reported aggregate income from operations of $216,400 and the following divisional results. Division IV Sales $250,000 $199,000 $499,000 $443,000 Cost of goods sold 204,000 189,000 297,000 246,000 Selling and administrative expenses 76,600 54,000 56,000 52,000 Income (loss) from operations $ (30,600) $ (44,000) $146,000 $145,000 Analysis reveals the following percentages of variable costs in each division. I || III IV Cost of goods sold 71 % 91 % 81 % 73 % Selling and administrative expenses 37 61 49 58 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 sho discontinued. (b2) Prepare an incremental analysis concerning the possible discontinuance of Division II. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Contribution margin Fixed costs Cost of goods sold Selling and administrative Total fixed expenses Income (loss) from operations Continue Eliminate Net Income Increase (Decrease) $

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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