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Veronica Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Dunn Company's six divisions. Veronica made the following presentation to Dunn'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 $25,700." Sales Cost of goods sold Gross profit Operating expenses Net income The Other Five Divisions $1,663,000 977,800 Percy Division $100,900 76,100 685,200 24,800 526,900 50,500 $158.300 $(25.700 ) Total $1,763,900 1,053,900 710,000 577,400 $132.600

Veronica Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Dunn Company's six divisions. Veronica made the following presentation to Dunn'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 $25,700." Sales Cost of goods sold Gross profit Operating expenses Net income The Other Five Divisions $1,663,000 977,800 Percy Division $100,900 76,100 685,200 24,800 526,900 50,500 $158.300 $(25.700 ) Total $1,763,900 1,053,900 710,000 577,400 $132.600

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 Dunn Company's six divisions. Veronica made the following presentation to Dunn'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 $25,700." Sales Cost of goods sold Gross profit Operating expenses Net income Sales Variable costs Cost of goods sold Operating expenses In the Percy Division, cost of goods sold is $59,300 variable and $16,800 fixed, and operating expenses are $30,400 variable and $20,100 fixed. None of the Percy Division's fixed costs will be eliminated if the division is discontinued. Total variable 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).) Contribution margin Fixed costs Cost of goods sold Operating expenses Total fixed The Other Five Divisions $1,663,000 977,800 Net income (loss) Veronica is 685,200 $ 526,900 $158,300 $ Percy Division $100,900 76,100 24,800 50,500 $(25,700 ) Total $1,763,900 1,053,900 Continue 710,000 577,400 $132,600 $ $ Eliminate $ $ Net Income Increase (Decrease)
Transcribed Image Text:Veronica Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Dunn Company's six divisions. Veronica made the following presentation to Dunn'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 $25,700." Sales Cost of goods sold Gross profit Operating expenses Net income Sales Variable costs Cost of goods sold Operating expenses In the Percy Division, cost of goods sold is $59,300 variable and $16,800 fixed, and operating expenses are $30,400 variable and $20,100 fixed. None of the Percy Division's fixed costs will be eliminated if the division is discontinued. Total variable 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).) Contribution margin Fixed costs Cost of goods sold Operating expenses Total fixed The Other Five Divisions $1,663,000 977,800 Net income (loss) Veronica is 685,200 $ 526,900 $158,300 $ Percy Division $100,900 76,100 24,800 50,500 $(25,700 ) Total $1,763,900 1,053,900 Continue 710,000 577,400 $132,600 $ $ Eliminate $ $ Net Income Increase (Decrease)
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