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Barbara Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Ivanhoe Company's six divisions. Barbara made the following presentation to Ivanhoe's
Barbara Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Ivanhoe Company's six divisions. Barbara made the following presentation to Ivanhoe's board of directors and suggested the Percy Division be eliminated, "If the Percy Division is eliminated," she said, "our total profits would increase by $25,700." In the Percy Division, cost of goods sold is $59,300 variable and $16,800 fixed, and operating expenses are $30,400 variable and $20,100 fixed. None of the Percy Division's fuxed costs will be eliminated if the division is discontinued. Is Barbara right about eliminating the Percy Division? Prepare a schedule to support your answer. (Enter negative amounts using either a negative sign preceding the number eg. -45 or parenthesese.g. (45).) Increase Continue Eliminate (Decrease) Sales Variable costs Cost of goods sold Operating expenses Total variable Contribution margin Fixed costs Cost of goods sold Operating expenses Total fixed Total variable Contribution margin Fixed costs Cost of goods sold Operating expenses Total fixed Net income (loss) Barbara is
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