Reference no: EM131746269
Problem- (Part Level Submission) Brislin Company has four operating divisions. During the first quarter of 2017, the company reported aggregate income from operations of $183,700 and the following divisional results.
Division
I II III IV
Sales $250,000 $198,000 $499,000 $443,000
Cost of goods sold 200,000 194,000 305,000 255,000
Selling and administrative expenses 70,300 62,000 65,000 55,000
Income (loss) from operations $ (20,300) $ (58,000) $129,000 $133,000
Analysis reveals the following percentages of variable costs in each division.
I II III IV
Cost of goods sold 66 % 88 % 81 % 76 %
Selling and administrative expenses 38 57 52 60
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.
(a) 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).)
(B) prepare an incremental analysis concerning the possible discontinuation of Division 1.
(C)Prepare an incremental analysis concerning the possible discontinuation of division II.