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Blossom, Inc has three divisions: Bud, Wise, and Er. The results of operations for May, 2022 are presented below. Bud Wise Er Total 5.700 9,500
Blossom, Inc has three divisions: Bud, Wise, and Er. The results of operations for May, 2022 are presented below. Bud Wise Er Total 5.700 9,500 3.800 19,000 $133.000 $95.000 $76,000 $304,000 60.800 49,400 30.400 140,600 Units sold Revenue Less variable costs Less direct fixed costs Less allocated fixed costs Net income 26,600 36,100 22.800 85,500 11,400 19.000 7.600 38,000 $34,200 $(9,500) $15.200 $39,900 All of the allocated costs will continue evenifa division is discontinued. Blossom allocates indirect fixed costs based on the number of units to be sold. Since the Wise division has a net loss, Blossom is concerned that it should be discontinued. Blossom thinks that if the division is closed that sales at the Bud division will increase by 12% while sales at the Er division will stay the same. (a) Your answer is partially correct. Prepare an analysis showing the effect of discontinuing the Wise division. (Do not round intermediate calculations and round final answers to decimal places, e.g. 1,525.) Bud Er Total Revenue $ 148960 $ 76000 $ 2245 Less variable costs 68096 30400 i 98496 Less direct fixed costs 26600 22800 i 49400 Less allocated fixed costs 38000 14179 i 521 Net income 16264 $ 8621 $ 248
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