Answer Happy

(LO 2) P26-4A Brislin Company has four operating divisions. During the first quarter of 2017, the company reported aggregate income from operations of $213,000 and the following divisional results. Problems: Set A 1 Division II III I IV Sales $450,000 $250,000 $200,000 $500,000 200,000 Cost of goods sold 300,000 250,000 192,000 60,000 Selling and administrative expenses 75,000 60,000 50,000 Income (loss) from operations $ (25,000) $ (52,000) $140,000 $150,000 Analysis reveals the following percentages of variable costs in each division. I II III IV Cost of goods sold 70% 90% 80% 75% 40 60 50 60 Selling and administrative expenses 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). Con- sensus is that one or both of the divisions should be discontinued. Instructions (a) Compute the contribution margin for Divisions I and II. (a) I $80,000 (b) Prepare an incremental analysis concerning the possible discontinuance of (1) Divi- sion I and (2) Division II. What course of action do you recommend for each division? (c) Prepare a columnar condensed income statement for Brislin Company, assuming (c) Income III $142,800 Division II is eliminated. (Use the CVP format.) Division II's unavoidable fixed costs are allocated equally to the continuing divisions. (d) Reconcile the total income from operations ($213,000) with the total income from operations without Division II. XLS