Betty Hopper, controller for Diamond Manufacturing Company, has prepared the following financial information for the most recent period showing profitability of its three divisions: Appliance 102,000 86,000 16,000 Electronics 108,000 92,000 16,000 Furniture 120,000 114,000 6,000 Sales Variable expenses Contribution margin Fixed expenses: 3 Factory insurance 4 Depreciation 5 Advertising 6 Utilities 7 Total fixed expenses 8 Operating income 1,000 2,000 600 800 4,400 11,600 1,400 2,600 600 1,000 5,600 2,200 3,600 ET 1,200 7,600 10,400 (1,600) 21 The factory insurancee and advertising assigned to the furniture division is avoidablr if the R2 division is discontinued. Depreciation will remain unchanged if a divsion is dropped 23 Discontinuing furniture will reduce the utilities by $800. 24 25 Required: 26 a. Prepare an analysis showing whether Furniture should be eliminated. 27 28 b. If the Furniture division is eliminated, what will be effect on the overall profit for 29 Diamond? 3a. 5 Sales 6 Contriubution margin 7 Contribution margin 18 Less direct fixed expenses 39 Insurance 40 Advertising 41 Utilities 42 Segment margin 43