Monty Company has four operating divisions. During the first quarter of 2017, the company reported aggregate income from operations of $218,700 and the following divisional results. Division I II III IV Sales $253,000 $195,000 $501,000 $447,000 Cost of goods sold 197,000 194,000 296,000 250,000 Selling and administrative expenses 69,300 62,000 61,000 48,000 Income (loss) from operations $ (13,300) $ (61,000) $144,000 $149,000 Analysis reveals the following percentages of variable costs in each division. I II III IV Cost of goods sold 72 % 89 % 79 % 76 % Selling and administrative expenses 40 57 52 59 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. Compute the contribution margin for Divisions I and II. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Division I Division II Contribution margin $ $ LINK TO TEXT Prepare an incremental analysis concerning the possible discontinuance of Division I. (Round answers to 0 decimal places, e.g. 1525. If amount decreases net income then enter the amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Continue Eliminate Net IncomeIncrease (Decrease) Contribution margin $ $ $ Fixed costs Cost of goods sold Selling and administrative Total fixed expenses Income (loss) from operations $ $ $ LINK TO TEXT Prepare an incremental analysis concerning the possible discontinuance of Division II. (Round answers to 0 decimal places, e.g. 1525. If amount decreases net income then enter the amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Continue Eliminate Net IncomeIncrease (Decrease) Contribution margin $ $ $ Fixed costs Cost of goods sold Selling and administrative Total fixed expenses Income (loss) from operations $ $ $ LINK TO TEXT What course of action do you recommend for each division? Division I EliminatedContinued Division II ContinuedEliminated

Monty Company has four operating divisions. During the first quarter of 2017, the company reported aggregate income from operations of $218,700 and the following divisional results. Division I II III IV Sales $253,000 $195,000 $501,000 $447,000 Cost of goods sold 197,000 194,000 296,000 250,000 Selling and administrative expenses 69,300 62,000 61,000 48,000 Income (loss) from operations $ (13,300) $ (61,000) $144,000 $149,000 Analysis reveals the following percentages of variable costs in each division. I II III IV Cost of goods sold 72 % 89 % 79 % 76 % Selling and administrative expenses 40 57 52 59 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. Compute the contribution margin for Divisions I and II. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Division I Division II Contribution margin $ $ LINK TO TEXT Prepare an incremental analysis concerning the possible discontinuance of Division I. (Round answers to 0 decimal places, e.g. 1525. If amount decreases net income then enter the amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Continue Eliminate Net IncomeIncrease (Decrease) Contribution margin $ $ $ Fixed costs Cost of goods sold Selling and administrative Total fixed expenses Income (loss) from operations $ $ $ LINK TO TEXT Prepare an incremental analysis concerning the possible discontinuance of Division II. (Round answers to 0 decimal places, e.g. 1525. If amount decreases net income then enter the amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Continue Eliminate Net IncomeIncrease (Decrease) Contribution margin $ $ $ Fixed costs Cost of goods sold Selling and administrative Total fixed expenses Income (loss) from operations $ $ $ LINK TO TEXT What course of action do you recommend for each division? Division I EliminatedContinued Division II ContinuedEliminated

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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Question

Monty Company has four operating divisions. During the first quarter of 2017, the company reported aggregate income from operations of $218,700 and the following divisional results.

	Division
	I	II	III	IV
Sales	$253,000	$195,000	$501,000	$447,000
Cost of goods sold	197,000	194,000	296,000	250,000
Selling and administrative expenses	69,300	62,000	61,000	48,000
Income (loss) from operations	$ (13,300)	$ (61,000)	$144,000	$149,000

Analysis reveals the following percentages of variable costs in each division.

	I		II		III		IV
Cost of goods sold	72	%	89	%	79	%	76	%
Selling and administrative expenses	40		57		52		59

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.

Compute the contribution margin for Divisions I and II. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

		Division I		Division II
Contribution margin		$		$

LINK TO TEXT

Prepare an incremental analysis concerning the possible discontinuance of Division I. (Round answers to 0 decimal places, e.g. 1525. If amount decreases net income then enter the amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

	Continue	Eliminate	Net Income Increase (Decrease)
Contribution margin	$	$	$
Fixed costs
Cost of goods sold
Selling and administrative
Total fixed expenses
Income (loss) from operations	$	$	$

LINK TO TEXT

Prepare an incremental analysis concerning the possible discontinuance of Division II. (Round answers to 0 decimal places, e.g. 1525. If amount decreases net income then enter the amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

	Continue	Eliminate	Net Income Increase (Decrease)
Contribution margin	$	$	$
Fixed costs
Cost of goods sold
Selling and administrative
Total fixed expenses
Income (loss) from operations	$	$	$

LINK TO TEXT

What course of action do you recommend for each division?

Division I		EliminatedContinued
Division II		ContinuedEliminated

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