Ainsley Corporation has four operating divisions. The budgeted revenues and expenses for each division for 2017 follows: (Click to view the results of each division.) Closing down any division would result in savings of 40% of the fixed costs of that division. Top management is very concerned about the unprofitable divisions (A and B) and is considering closing them for the year. Read the requirements Requirement 1. Calculate the increase or decrease in operating income if Ainsley closes division A. Begin by calculating Division A's contribution margin. Division A Data Table Sales Division A B D Contribution margin Sales $ 504.000 $ 948.000 $ 440,000 96,000 Cost of goods sold Selling, general, and administrative expenses Operating incomelloss 930,000 202,500 960,000 $ 1,240,000 765,000 925.000 144,000 210,000 $ (32,000) $ (184,500) $ 51,000 $ 105,000 Further analysis of costs reveals the following percentages of variable costs in each division: Division B A D 90 % 80 % 90 % 85 % Cost of goods sold Selling, general, and administrative expenses 50 % 50 % 60 % 60 % Requirements 1. Calculate the increase or decrease in operating income if Ainsley closes division A. 2. Calculate the increase or decrease in operating income if Ainsley closes division B. 3. What other factors should the top management of Ainsley consider before making a decision? Print Done