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Brislin Company has four operating divisions. During the first quarter of 2020, the company reported aggregate income from operations of $216,400 and the following divisional

Brislin Company has four operating divisions. During the first quarter of 2020, the company reported aggregate income from operations of $216,400 and the following divisional results.

Division
I II III IV
Sales $250,000 $199,000 $499,000 $443,000
Cost of goods sold 204,000 189,000 297,000 246,000
Selling and administrative expenses 76,600 54,000 56,000 52,000
Income (loss) from operations $ (30,600) $ (44,000) $146,000 $145,000

Analysis reveals the following percentages of variable costs in each division.

I II III IV
Cost of goods sold 71 % 91 % 81 % 73 %
Selling and administrative expenses 37 61 49 58

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 (I and II). Consensus is that one or both of the divisions should be discontinued.

Contribution margin continue eliminate net income increase/decrease
Fixed costs
Cost of goods sold
Selling and administrative
Total fixed expenses
Income (loss) from operations $ $ $

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