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Brislin Company has four operating divisions. During the first quarter of 2020, the company reported aggregate income from operations of $208,400 and the following
Brislin Company has four operating divisions. During the first quarter of 2020, the company reported aggregate income from operations of $208,400 and the following divisional results. Division IV Sales $245,000 $198,000 $501,000 $450,000 Cost of goods sold 203,000 189,000 297,000 254,000 Selling and administrative expenses 74,600 60,000 62,000 46,000 Income (loss) from operations $ (32,600) $(51,000) $142,000 $150,000 Analysis reveals the following percentages of variable costs in each division. "I IV Cost of goods sold 66 % 88 % 78 % 73 % Selling and administrative expenses 40 58 48 57 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.
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