Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Crane, Inc. has three divisions: Bud, Wise, and Er. The results of operations for May, 2022 are presented below Bud Wise Er Total Units

image text in transcribed

Crane, Inc. has three divisions: Bud, Wise, and Er. The results of operations for May, 2022 are presented below Bud Wise Er Total Units sold 2.700 4,500 1800 9,000 Revenue $63.000 $45.000 $36.000 $144,000 Less variable costs 28,800 23.400 14,400 66.600 Less direct fixed costs 12.600 17.100 10.800 40.500 Less allocated fixed costs 5,400 9,000 3,600 18.000 Net income $16.200 $14,500) $7,200 $18.900 All of the allocated costs will continue even if a division is discontinued. Crane allocates indirect fixed costs based on the number of units to be sold Since the Wise division has a net loss, Crane is concerned that it should be discontinued. Crane thinks that if the division is closed, that sales at the Bud division will increase by 12% while sales at the Er division will stay the same Prepare an analysis showing the effect of discontinuing the Wise division (Do not round intermediate calculations and round final answers to O decimal places, eg. 1.525) Revenue Less variable costs Less direct fixed costs Less allocated fixed costs Net income $ Should Crane close the Wise division? Bud Er Total

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting

Authors: Donald E. Kieso, Jerry J. Weygandt, And Terry D. Warfield

13th Edition

9780470374948, 470423684, 470374942, 978-0470423684

More Books

Students also viewed these Accounting questions

Question

Describe the Gestalt approach to the mind brain problem.

Answered: 1 week ago

Question

Plss help me this one 3) Evaluate the integrals 3 --2--dx 3 1-FIXI

Answered: 1 week ago