Dropping Unprofitable Division

a$.$ Assuming that total fixed costs and expenses would not be affected by discontinuing

the engineering division, is the financial vice president's analysis correct?

Prepare a differential analysis to support your answer.

b$.$ Assume that discontinuance of the engineering division will enable the company to avoid

$45\%$ of the fixed portion of cost of services and $30\%$ of the fixed operating expenses

allocated to the engineering division.

Calculate the resulting effect on net income. Round all calculated answers to the nearest dollar.

c$.$ Assume that in addition to the cost avoidance in b$.,$ the capacity released by discontinuance

of the engineering division can be used to provide $9,600$ new services that would have a

variable cost per service of $$58$ and would require additional fixed costs totaling $$115,200.$

At what unit price must the new service be sold if Bingham is to increase its total net income by

$$192,000?$ Round answer to two decimal places.