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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. Sales Cost of goods sold Selling and administrative expenses Income (loss) from operations $250,000 204,000 76,600 $ (30,600) Division II $199,000 $499,000 189,000 297,000 54,000 56,000 $ (44,000) $146,000 IV $443,000 246,000 52,000 $145,000 Analysis reveals the following percentages of variable costs in each division. Cost of goods sold Selling and administrative expenses I 71 % 37 II 91% 61 III 81 % 4 9 IV 73 % 5 8 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. *a) Compute the contribution margin for Divisions I and II. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Division I Division II Contribution margin Prepare an incremental analysis concerning the possible discontinuance of Division I. (Round answers to o decimal places, e.g. 1525. Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45).) Continue Eliminate Net Income Increase (Decrease) Contribution margin Fixed costs Cost of goods sold Selling and administrative Total fixed expenses Income (loss) from operations Prepare an incremental analysis concerning the possible discontinuance of Division II. (Round answers to o decimal places, e.g. 1525. Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45).) Continue Eliminate Net Income Increase (Decrease) Contribution margin Fixed costs Cost of goods sold Selling and administrative Total fixed expenses Income (loss) from operations Your answer is correct. What course of action do you recommend for each division? Division Division II Your answer is partially correct. Try again. Prepare a columnar condensed income statement for Brislin Company, assuming Division 1 is eliminated. Division It's unavoidable fixed costs are allocated equally to the continuing divisions. Round answers to decimal places, .g. 1525 Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses e.g. (45).) BRISLIN COMPANY CVP Income Statement For the Quarter Ended March 31, 2017 Divisions Sales Variable costs Cost of goods sold Seling and administrative Total variable costs Contribution margin Foxed costs Cost of goods sold Selling and administrative Total fixed costs 154000 44164 FN164 Income (less) operations 27400 45000
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