Carla Vista Company has four operating divisions. During the first quarter of 2022, the company reported aggregate income from operations of $211,400 and the following divisional results. Division 11 III IV Sales $250,000 $199,000 $498,000 $449,000 204,000 192,000 295,000 247,000 Cost of goods sold Selling and administrative expenses 74,600 63,000 60,000 49,000 Income (loss) from operations $(28,600) $(56,000) $143.000 $153,000 Analysis reveals the following percentages of variable costs in each division. I 11 III IV Cost of goods sold 72 % 88 % 80 % 76 % Selling and administrative expenses 40 60 51 61 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. 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 Division 11 Contribution margin $ $ $ Prepare an incremental analysis concerning the possible discontinuance of Division 1. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net Income Increase (Decrease) Continue Eliminate 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 11. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net Income Increase (Decrease) Continue Eliminate Contribution margin $ $ $ $ Fixed costs Cost of goods sold Selling and administrative Total fixed expenses Income (loss) from operations $ $ $ $ $ What course of action do you recommend for each division? Division 1 Division 11 CARLA VISTA COMPANY CVP Income Statement For the Quarter Ended March 31, 2022 Divisions 1 III IV Sales $ $ $ Variable costs Cost of goods sold Selling and administrative Total variable costs Contribution margin Fixed costs Cost of goods sold Selling and administrative Total fixed costs Income (loss) from operations $ $ $ CARLA VISTA COMPANY CVP Income Statement For the Quarter Ended March 31, 2022 Divisions III IV Total $ $ LA tA $
