Karen Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Crane Company's six divisions. Karen made the following presentation to Crane's board of directors and suggested the Percy Division be eliminated. "If the Percy Division is eliminated," she said, "our total profits would increase by $26,100." Sales Cost of goods sold Gross profit Operating expenses Net income Sales Variable costs Cost of goods sold Operating expenses Total variable Contribution margin Fixed costs Cost of goods sold Operating expenses Total fixed The Other Five Divisions In the Percy Division, cost of goods sold is $59,000 variable and $17,000 fixed, and operating expenses are $29,100 variable and $21,100 fixed. None of the Percy Division's fixed costs will be eliminated if the division is discontinued. Net income (loss) $1,665,000 Is Karen right about eliminating the Percy Division? Prepare a schedule to support your answer. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Karen is 978,300 686,700 526,800 $ $159,900 $ Percy Division $100,100 76.000 24.100 50,200 $(26,100 ) Continue Total $1,765,100 1,054,300 $ 710,800 $ 577,000 $133,800 Eliminate $ $ Net Income Increase (Decrease)
Karen Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Crane Company's six divisions. Karen made the following presentation to Crane's board of directors and suggested the Percy Division be eliminated. "If the Percy Division is eliminated," she said, "our total profits would increase by $26,100." Sales Cost of goods sold Gross profit Operating expenses Net income Sales Variable costs Cost of goods sold Operating expenses Total variable Contribution margin Fixed costs Cost of goods sold Operating expenses Total fixed The Other Five Divisions In the Percy Division, cost of goods sold is $59,000 variable and $17,000 fixed, and operating expenses are $29,100 variable and $21,100 fixed. None of the Percy Division's fixed costs will be eliminated if the division is discontinued. Net income (loss) $1,665,000 Is Karen right about eliminating the Percy Division? Prepare a schedule to support your answer. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Karen is 978,300 686,700 526,800 $ $159,900 $ Percy Division $100,100 76.000 24.100 50,200 $(26,100 ) Continue Total $1,765,100 1,054,300 $ 710,800 $ 577,000 $133,800 Eliminate $ $ Net Income Increase (Decrease)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Subject: accounting
Transcribed Image Text:Karen Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Crane Company's six divisions.
Karen made the following presentation to Crane's board of directors and suggested the Percy Division be eliminated. "If the Percy
Division is eliminated," she said, "our total profits would increase by $26,100."
Sales
Cost of goods sold
Gross profit
Operating expenses
Net income
Sales
Variable costs
Cost of goods sold
Operating expenses
Total variable
Contribution margin
Fixed costs
Cost of goods sold
Operating expenses
Total fixed
The Other
Five Divisions
Net income (loss)
$1,665,000
Karen is
In the Percy Division, cost of goods sold is $59,000 variable and $17,000 fixed, and operating expenses are $29,100 variable and
$21,100 fixed. None of the Percy Division's fixed costs will be eliminated if the division is discontinued.
Is Karen right about eliminating the Percy Division? Prepare a schedule to support your answer. (Enter negative amounts using either a
negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
978,300
686,700
$
526,800
$
$159,900
Percy
Division
$100,100
76,000
24,100
50.200
$(26,100 )
Continue
Total
$
$1,765,100
1,054,300
710,800
$
577.000
$133,800
Eliminate
$
$
Net Income
Increase
(Decrease)
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