Blossom, 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 Daniel, that his division earned money for the company. Following is the most recent financial analysis for each division:

		Weak			Average		Strong
Sales revenue		$127,800			$450,500		$520,500
Variable expenses		58,800			246,100		306,500
Contribution margin		69,000			204,400		214,000
Direct expenses		36,100			73,200		114,100
Allocated expenses		69,200			69,200		69,200
Operating income		$(36,300)			$62,000		$30,700

(a)

Prepare a revised income statement showing the segment margin for each division.

		Weak		Average		Strong		Total
select an income statement item Variable expenseContribution marginAllocated expenseSegment marginDirect costsOperating incomeSales		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
select an income statement item Allocated expenseVariable expenseOperating incomeDirect expenseContribution marginSalesSegment margin		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
select a summarizing line for the first part Contribution marginSegment marginAllocated expenseSalesOperating incomeVariable expenseDirect expense		enter a total amount for the first part		enter a total amount for the first part		enter a total amount for the first part		enter a total amount for the first part
select an income statement item Segment marginOperating incomeAllocated expenseVariable expenseSalesContribution marginDirect expense		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
select a summarizing line for the second part Operating incomeSegment marginContribution marginDirect expenseVariable expenseAllocated expenseSales		$enter a total amount for the second part		$enter a total amount for the second part		$enter a total amount for the second part		enter a total amount for the second part
select an income statement item Allocated expenseVariable expenseOperating incomeDirect expenseSegment marginSalesContribution margin								enter a dollar amount
select a closing name for this statement Allocated expenseDirect expenseSegment marginOperating incomeVariable expenseContribution marginSales								$enter a total amount for this statement

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(b)

By how much would total income change if the Weak division were dropped?

Total income will select an option increase decrease by $enter a dollar amount .

(c)

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 $enter a dollar amount , resulting in an select an option