Cheyenne Company has four operating divisions. During the first quarter of 2017, the company reported aggregate income from operations of $231,300 and the following divisional results.

Division IIIIIIIV Sales $253,000 $195,000 $502,000 $449, 000 Cost of goods sold 197,000190,000295,000246,000 Selling and administrative expenses 75,70057,00060,00047,000 Income (loss) from operations$ (19,700)$ (52,000)$147,000$156,000

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

IIIIIIIV Cost of goods sold 67%89%81%73%Selling and administrative expenses 37624859

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 I Division II Contribution margin$

$

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display an incremental analysis concerning the possible discontinuance of Division I.(Round answers to 0 decimal places, e.g. 1525. If amount decreases net income then enter the amount 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 costsCost of goods sold

Selling and administrative

Total fixed expenses

Income (loss) from operations$

$

$

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display an incremental analysis concerning the possible discontinuance of Division II.(Round answers to 0 decimal places, e.g. 1525. If amount decreases net income then enter the amount 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 costsCost of goods sold

Selling and administrative

Total fixed expenses

Income (loss) from operations$

$

$

LINK TO TEXT

What course of action do you recommend for each division?

Division I

Eliminated

Continued

Division II

Continued

Eliminated

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display a columnar condensed income statement for Cheyenne Company, assuming Division II is eliminated. Division II's unavoidable fixed costs are allocated equally to the continuing divisions.(If amount decreases net income then enter the amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

CHEYENNE COMPANY CVP Income Statement

For the Month Ended March 31, 2017

For the Quarter Ended March 31, 2017

For the Year Ended March 31, 2017

Divisions IIIIIV Total Sales$

$

$

$

Variable costsCost of goods sold

Selling and administrative

Total variable costs

Contribution margin

Fixed costsCost of goods sold

Selling and administrative

Total fixed costs

Income (loss) from operations$

$

$

$