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Units sold Revenue Less variable costs Less direct fixed costs Less allocated fixed costs Net income 2,700 $63,000 28,800 12,600 5,400 4,500 $45,000 $36,000 23,400 17,100 9,000 1,800 $16,200 $(4,500) 14,400 10,800 3,600 $7,200 9,000 $144,000 66,600 40,500 18,000 $18,900

Units sold Revenue Less variable costs Less direct fixed costs Less allocated fixed costs Net income 2,700 $63,000 28,800 12,600 5,400 4,500 $45,000 $36,000 23,400 17,100 9,000 1,800 $16,200 $(4,500) 14,400 10,800 3,600 $7,200 9,000 $144,000 66,600 40,500 18,000 $18,900

FINANCIAL ACCOUNTING
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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Prepare an analysis showing the effect of discontinuing the Wise division. (Do not round intermediate calculations and round final answers to O decimal places, e.g. 1,525.) Revenue Less variable costs Less direct fixed costs Less allocated fixed costs Net income Yes rane close the Wise division? No Bud $ Er Total
Transcribed Image Text:Prepare an analysis showing the effect of discontinuing the Wise division. (Do not round intermediate calculations and round final answers to O decimal places, e.g. 1,525.) Revenue Less variable costs Less direct fixed costs Less allocated fixed costs Net income Yes rane close the Wise division? No Bud $ Er Total
Crane, Inc. has three divisions: Bud, Wise, and Er. The results of operations for May, 2022 are presented below. Units sold Revenue Less variable costs Less direct fixed costs Less allocated fixed costs Net income Bud 2,700 $63,000 28,800 12,600 5,400 $16,200 Wise 4,500 $45,000 23,400 17,100 9,000 $(4,500) Er 1,800 $36,000 14,400 10,800 3,600 $7,200 Total 9,000 $144,000 66,600 40,500 18,000 $18,900 All of the allocated costs will continue even if a division is discontinued. Crane allocates indirect fixed costs based on the number of units to be sold. Since the Wise division has a net loss, Crane is concerned that it should be discontinued. Crane thinks that if the division is closed, that sales at the Bud division will increase by 12% while sales at the Er division will stay the same.
Transcribed Image Text:Crane, Inc. has three divisions: Bud, Wise, and Er. The results of operations for May, 2022 are presented below. Units sold Revenue Less variable costs Less direct fixed costs Less allocated fixed costs Net income Bud 2,700 $63,000 28,800 12,600 5,400 $16,200 Wise 4,500 $45,000 23,400 17,100 9,000 $(4,500) Er 1,800 $36,000 14,400 10,800 3,600 $7,200 Total 9,000 $144,000 66,600 40,500 18,000 $18,900 All of the allocated costs will continue even if a division is discontinued. Crane allocates indirect fixed costs based on the number of units to be sold. Since the Wise division has a net loss, Crane is concerned that it should be discontinued. Crane thinks that if the division is closed, that sales at the Bud division will increase by 12% while sales at the Er division will stay the same.
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