Linda Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Cullumber Company's six divisions. Linda made the following presentation to Cullumber'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." The Other Percy Five Divisions Division Total Sales $1,663,000 $100,900 $1,763,900 Cost of goods sold 977,300 76,800 1,054,100 Gross profit 685,700 24,100 709,800 Operating expenses 528,400 50,200 578,600 Net income $157,300 $ (26,100 ) $131,200 In the Percy Division, cost of goods sold is $59,500 variable and $17,300 fixed, and operating expenses are $31,000 variable and $19,200 fixed. None of the Percy Division's fixed costs will be eliminated if the division is discontinued. Is Linda 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).) Net Income Increase Continue Eliminate (Decrease) Sales $ $ Variable costs Cost of goods sold Operating expenses Total variable Contribution margin Fixed costs Cost of goods sold Operating expenses Total fixed Net income (loss) $ 2$ $ Linda is
Linda Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Cullumber Company's six divisions. Linda made the following presentation to Cullumber'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." The Other Percy Five Divisions Division Total Sales $1,663,000 $100,900 $1,763,900 Cost of goods sold 977,300 76,800 1,054,100 Gross profit 685,700 24,100 709,800 Operating expenses 528,400 50,200 578,600 Net income $157,300 $ (26,100 ) $131,200 In the Percy Division, cost of goods sold is $59,500 variable and $17,300 fixed, and operating expenses are $31,000 variable and $19,200 fixed. None of the Percy Division's fixed costs will be eliminated if the division is discontinued. Is Linda 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).) Net Income Increase Continue Eliminate (Decrease) Sales $ $ Variable costs Cost of goods sold Operating expenses Total variable Contribution margin Fixed costs Cost of goods sold Operating expenses Total fixed Net income (loss) $ 2$ $ Linda is
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Linda Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Cullumber
Company's six divisions. Linda made the following presentation to Cullumber'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."
The Other
Percy
Division
Five Divisions
Total
Sales
$1,663,000
$100,900
$1,763,900
Cost of goods sold
977,300
76,800
1,054,100
Gross profit
685,700
24,100
709,800
Operating expenses
528,400
50,200
578,600
Net income
$157,300
$ (26,100 )
$131,200
In the Percy Division, cost of goods sold is $59,500 variable and $17,300 fixed, and operating expenses are
$31,000 variable and $19,200 fixed. None of the Percy Division's fixed costs will be eliminated if the division is
discontinued.
Is Linda right about eliminating the Percy Division? Prepare a schedule to support your answer. (Enter negative
amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Net Income
Increase
Continue
Eliminate
(Decrease)
Sales
Variable costs
Cost of goods sold
Operating expenses
Total variable
Contribution margin
Fixed costs
Cost of goods sold
Operating expenses
Total fixed
Net income (loss)
2$
Linda is
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