Based on the way allocated expenses are divided among the divisions, what do you think will happen to the Average division if the company continues to prepare financial statements in this way, assuming Weak was dropped?

If Weak is dropped, then Average will report allocated expenses of $_____, resulting in an operating income of $_____ for the division.

Physical Phitness, Inc. operates three divisions, Weak, Average, and Strong. As it turns out, the Weak division has the lowest operating income, and the president wants to close it. Survival of the fittest, I say!" was his response when the Weak division's manager, insisted Anna Hoffman, that his division earned money for the company. Following is the most recent financial analysis for each division: Weak Average Strong Sales revenue $125,000 $450,000 $600,000 Variable expenses 45,000 25 300,000 Contribution margin 80,000 200,000 300,000 Direct expenses 30,000 80,000 100,000 Allocated expenses 70,000 70,000 70,000 Operating income $(20,000) $50,000 $130,000