1. Wildhorse Manufacturing Company has four operating divisions. During the first quarter of 2022, the company reported aggregate
income from operations of $139,800 and the following divisional results:
Wildhorse Manufacturing Company has four operating divisions. During the first quarter of 2022, the company reported aggregate income from operations of $139,800 and the following divisional results: Division II III IV Sales $504,000 $393,000 $313.400 $175,700 297,000 241.800 273,200 151,800 Cost of goods sold Selling and administrative expenses 67.400 74,400 66,800 73.900 Income (loss) from operations $139,600 $76,800 ${26,600) $(50,000) The analysis reveals the following percentages of variable costs in each division: II III IV 70% 92% Cost of goods sold 74% 92% 39 50 65 70 Selling and administrative expenses Discontinuance of any division would save 50% of the fixed costs and expenses for that division. 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 (III and IV. The consensus is that the company should discontinue one or both of these divisions. Calculate the contribution margin for divisions III and IV. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45)) Divisions III Divisions IV $ $ Contribution margin Prepare an incremental analysis for the possible discontinuance of (1) division Illand (2) division IV. (Round answers to decimal places, eg. 125. Enter all negative amounts using either a negative sign preceding the number eg. -45 or parentheses eg. (45). While alternate approaches are possible, Irrelevant fixed costs should be included in both options when solving this problem) (1) Division III Income Increase Income Increase (Decrease) Division III: Keep Div. III Shut Div. III Contribution margin $ $ $ Fixed costs Totals $ (2) Division IV Incom Increase (Decrease) Shut Div. IV Division IV: Keep Div. IV $ $ Contribution margin Fixed costs $ Totals What course of action do you recommend for each division? Division III should be Division IV should be Prepare a condensed income statement in columns for Wildhorse Manufacturing, assuming division IV is eliminated. Use the CVP format. Division IV's unavoidable fixed costs are allocated equally to the continuing divisions. (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses eg. (45). While alternate approaches are possible, irrelevant fixed costs should be included in both options when solving this problem.) WILDHORSEMANUFACTURING COMPANY CVP Income Statement Div! Div III Diy II $ $ $ $ Reconcile the total income from operations of $139,800 with the total income from operations without division in $ Income from operations with Division IV $ Incremental income from eliminating Division IV $ Income from operations without Division IV