Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Data table Division A B C D P Sales $ 504,000 $ 948,000 $ 960,000 $ 1,240,000 ne Cost of goods sold 440,000 930,000
Data table Division A B C D P Sales $ 504,000 $ 948,000 $ 960,000 $ 1,240,000 ne Cost of goods sold 440,000 930,000 765,000 925,000 in 96,000 202,500 144,000 210,000 Selling, general, and administrative expenses $ (32,000) $ (184,500) $ 51,000 $ 105,000 Operating income/loss Further analysis of costs reveals the following percentages of variable costs in each division: Division A B C D Cost of goods sold 90 % 80% 90% 85% Selling, general, and administrative expenses 50% 50% 60% 60% Print Done Ainsley Corporation has four operating divisions. The budgeted revenues and expenses for each division for 2020 follows: (Click to view the results of each division.) Closing down any division would result in savings of 40% of the fixed costs of that division. Top management is very concerned about the unprofitable divisions (A and B) and is considering closing them for the year. Read the requirements. Requirement 1. Calculate the increase or decrease in operating income if Ainsley closes division A. Begin by calculating Division A's contribution margin. Sales Variable cost of goods sold Variable selling, general, administrative expenses Contribution margin Division A 4 Clear all Check answer this Etext pages Get more help
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started