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Aunsley Corporation has loul operating divisions. Tha budgeted ravenues and expenses for esch division for 2017 follows: FHt (Circk to yw the resitis of each
Aunsley Corporation has loul operating divisions. Tha budgeted ravenues and expenses for esch division for 2017 follows: FHt (Circk to yw the resitis of each division.) the year: Read the tequirments Requireme Begn by cas swes Requirement 1. Calculate the increase or decrease in operating income if Ainsley closes division A. Begin by calculating Division A's contribution margin. Now, calculate the fixed costs that will be saved by closing division A. Requirement 2. Calculate the increase or decrease in operating income if Ainsley closes division B. Begin by calculating division B's contribution margin. Requirement 2. Calculate the increase or decrease in operating income if Ainsley closes division B. Begin by calculating division B's contribution margin. Now, calculate the fixed costs that will be saved by closing division B. Requirement 3. What other factors should the top management of Ainsley consider before making a decision? A. Management should consider the impact on the morale of the remaining employees if the division(s) are closed. B. Management should consider the role that the divisions' product line plays relative to other product lines. C. Both of the above. D. Neither of the above, management should make this decision relying only on financial data
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