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Blossom Manufacturing Company has four operating divisions. During the first quarter of 2022, the company reported aggregate income from operations of $214.600 and the following
Blossom Manufacturing Company has four operating divisions. During the first quarter of 2022, the company reported aggregate income from operations of $214.600 and the following divisional results: Division 1 11 III IV Sales $529.900 $176,100 $410,409 $308,700 240,900 266,600 299,100 153,000 Cost of goods sold Selling and administrative expenses 57,600 70.400 60,600 72.300 Income (loss) from operations $183.200 $99.100 $118,500) $(49,200) The analysis reveals the following percentages of variable costs in each division; ! 11 III IV 72% 92% 75% 92% Cost of goods sold Selling and administrative expenses 42 48 65 70 Discontinuance of any division would save 50% of the fixed costs and expenses for that division Top management is very concerned about the unprofitable divisions (Ill and IV). The consensus is that the company should discontinue one or both of these divisions. Prepare an incremental analysis for the possible discontinuance of (1) division III and (2) division IV.(Round answers to decimal places, eg. 125. Enter all negative amounts using either a negative sign preceding the number eg. 45 or parentheses es. (45). While alternate approaches are possible, irrelevant fixed costs should be included in both options when solving this problem.) (1) Division 11 Income Increase (Decrease) Division III: Keep Div. III Shut Div. III Contribution margin S Fixed costs Totals $ (2) Division IV Income Increase (Decrease) Keep Div. IV Shut Div. IV Division IV: Contribution margin $ Fixed costs Totals $
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