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Donna Clark, a recent graduate of Bell's accounting program. evaluated the operating performance of Pharoah Company's six divisions. Donna made the following presentation to Pharoah's
Donna Clark, a recent graduate of Bell's accounting program. evaluated the operating performance of Pharoah Company's six divisions. Donna made the following presentation to Pharoah's board of directors and suggested the Percy Division be eliminated. Hit the Percy Division is eliminated" she said, our total profits would increase by $27.100." The Other Five Divisions $1,665,000 Percy Division Total Sales $100.100 $1,765,100 978,700 76,700 1,055,400 686,300 23.400 709.700 Cost of goods sold Gross profit Operating expenses Net Income 528,700 50,500 579.200 $157,600 $(27.100) $130.500 In the Percy Division, cost of goods sold is $60,100 variable and $16,600 fixed and operating expenses are $30,400 variable and $20,100 fixed. None of the Percy Division's fixed costs will be eliminated if the division is discontinued. Is Donna right about eliminating the Porey Division? Prepare a schedule to support your answer. (Enter negative amounts using either a negative sign preceding the number 4,8. 45 or parentheses es (45)) Net Income Increase (Decrease) Continue Eliminate Sales $ $ Variable costs Sales $ Variable costs Cost of goods sold Operating expenses Total variable Contribution margin Fixed costs Cost of goods sold Operating expenses Total fixed C Net income (loss) $ $ Donnais C
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