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Veronica Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Cullumber Company's six divisions. Veronica 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 $26,200." Sales Cost of goods sold Gross profit Operating expenses Net income Sales Variable costs The Other Five Divisions Cost of goods sold $1,663,000 978,600 Operating expenses 684,400 526,000 $ $158,400 Percy Division $100,100 76,800 23,300 49,500 $(26,200 ) In the Percy Division, cost of goods sold is $59,300 variable and $17,500 fixed, and operating expenses are $31,400 variable and $18,100 fixed. None of the Percy Division's fixed costs will be eliminated if the division is discontinued. Continue Total Is Veronica 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).) $1,763,100 $ 1,055,400 707,700 575,500 $132,200 Eliminate $ Net Income Increase (Decrease)

Veronica Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Cullumber Company's six divisions. Veronica 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 $26,200." Sales Cost of goods sold Gross profit Operating expenses Net income Sales Variable costs The Other Five Divisions Cost of goods sold $1,663,000 978,600 Operating expenses 684,400 526,000 $ $158,400 Percy Division $100,100 76,800 23,300 49,500 $(26,200 ) In the Percy Division, cost of goods sold is $59,300 variable and $17,500 fixed, and operating expenses are $31,400 variable and $18,100 fixed. None of the Percy Division's fixed costs will be eliminated if the division is discontinued. Continue Total Is Veronica 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).) $1,763,100 $ 1,055,400 707,700 575,500 $132,200 Eliminate $ Net Income Increase (Decrease)

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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Veronica Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Cullumber Company's six divisions. Veronica 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 $26,200." Sales Cost of goods sold Gross profit Operating expenses Net income Sales Variable costs Cost of goods sold The Other Five Divisions Operating expenses $1,663,000 Total variable 978,600 684,400 $ 526,000 $158,400 Percy Division $100,100 76,800 23,300 49,500 $(26,200 ) Continue In the Percy Division, cost of goods sold is $59,300 variable and $17,500 fixed, and operating expenses are $31,400 variable and $18,100 fixed. None of the Percy Division's fixed costs will be eliminated if the division is discontinued. Is Veronica 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).) Total $ $1,763,100 LA 1,055,400 707,700 575,500 $132,200 Eliminate LA Net Income Increase (Decrease)
Transcribed Image Text:Veronica Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Cullumber Company's six divisions. Veronica 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 $26,200." Sales Cost of goods sold Gross profit Operating expenses Net income Sales Variable costs Cost of goods sold The Other Five Divisions Operating expenses $1,663,000 Total variable 978,600 684,400 $ 526,000 $158,400 Percy Division $100,100 76,800 23,300 49,500 $(26,200 ) Continue In the Percy Division, cost of goods sold is $59,300 variable and $17,500 fixed, and operating expenses are $31,400 variable and $18,100 fixed. None of the Percy Division's fixed costs will be eliminated if the division is discontinued. Is Veronica 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).) Total $ $1,763,100 LA 1,055,400 707,700 575,500 $132,200 Eliminate LA Net Income Increase (Decrease)
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