Crane Company has four operating divisions. During the first quarter of 2022, the company reported aggregate...
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Crane Company has four operating divisions. During the first quarter of 2022, the company reported aggregate income from operations of $210,600 and the following divisional results. Division III IV Sales $245,000 $197,000 $504,000 $450,000 Cost of goods sold 200,000 192,000 301,000 249,000 Selling and administrative expenses 72,400 63,000 58,000 50,000 Income (loss) from operations $(27,400) $ (58,000) $145,000 $151,000 Analysis reveals the following percentages of variable costs in each division. || III IV Cost of goods sold 73 % 91 % 82 % 75 % Selling and administrative expenses 39 59 50 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. Crane Company has four operating divisions. During the first quarter of 2022, the company reported aggregate income from operations of $210,600 and the following divisional results. Division III IV Sales $245,000 $197,000 $504,000 $450,000 Cost of goods sold 200,000 192,000 301,000 249,000 Selling and administrative expenses 72,400 63,000 58,000 50,000 Income (loss) from operations $(27,400) $ (58,000) $145,000 $151,000 Analysis reveals the following percentages of variable costs in each division. || III IV Cost of goods sold 73 % 91 % 82 % 75 % Selling and administrative expenses 39 59 50 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.
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