Cullumber, Inc. operates three divisions, Weak, Average, and Strong. As it turns out, the Weak division has the lowest operating income, and the president wants to close it. Survival of the fittest, I say! was his response when the Weak divisions manager, insisted Mark, that his division earned money for the company. Following is the most recent financial analysis for each division:

		Weak			Average		Strong
Sales revenue		$125,100			$451,500		$501,400
Variable expenses		58,700			246,300		309,300
Contribution margin		66,400			205,200		192,100
Direct expenses		37,100			78,200		110,100
Allocated expenses		69,600			69,600		69,600
Operating income		$(40,300)			$57,400		$12,400

(a)

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• Correct Answer

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Prepare a revised income statement showing the segment margin for each division.

		Weak		Average		Strong		Total
select an income statement item Segment marginVariable expenseSalesDirect costsAllocated expenseOperating incomeContribution margin		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
select an income statement item Direct expenseSalesVariable expenseOperating incomeSegment marginContribution marginAllocated expense		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
select a summarizing line for the first part Variable expenseContribution marginAllocated expenseOperating incomeDirect expenseSalesSegment margin		enter a total amount for the first part		enter a total amount for the first part		enter a total amount for the first part		enter a total amount for the first part
select an income statement item Allocated expenseSegment marginSalesDirect expenseContribution marginOperating incomeVariable expense		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
select a summarizing line for the second part Variable expenseContribution marginDirect expenseSegment marginOperating incomeSalesAllocated expense		$enter a total amount for the second part		$enter a total amount for the second part		$enter a total amount for the second part		enter a total amount for the second part
select an income statement item Operating incomeContribution marginAllocated expenseSegment marginSalesVariable expenseDirect expense								enter a dollar amount
select a closing name for this statement Variable expenseSalesDirect expenseOperating incomeContribution marginSegment marginAllocated expense								$enter a total amount for this statement

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(b)

By how much would total income change if the Weak division were dropped?

Total income will select an option increasedecrease by $enter a dollar amount .