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Donna Mars, 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 Mars, 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. "If the Percy Division is eliminated" she said, "our total profits would increase by $27,100." 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 fised. None of the Percy Division's foed costs will be etiminated if the division is discontinued. Is Donna right about eliminating the Percy Division? Prepart a schedule to support your antwer, (Enter negative amounts using either a negotive sign preceding the number es. -45 or porentheser cs. (45)) Net Income Continue Increase (Decrease) Variabie costs Cost of goods sold Operating expenses Total variable Contribution margin Fined costs Cest of moods sold Eliminate. (Decrease) Sales 3 5 5
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