E7-15 Use incremental analysis concerning elimination of division.
Veronica Mars, a recent graduate of Bell's accounting program, evaluated the operating performance
of Dunn Company's six divisions. Veronica made the following presentation to Dunn'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 $26,000."
		The Other	Percy
		Five Divisions	Division	Total
	Sales	$1,664,200	$100,000	$1,764,200
	Cost of goods sold	978,520	76,000	1,054,520
	Gross Profit	685,680	24,000	709,680
	Operating expenses	527,940	50,000	577,940
	Net income	$157,740	($26,000)	$131,740
In the Percy Division, cost of goods sold is $61,000 variable and $15,000 fixed, and operating expenses
are $30,000 variable and $20,000 fixed. None of the Percy Division's fixed costs will be eliminated if the
division is discontinued.
Instructions
Is Veronica right about eliminating the Percy Division? Prepare a schedule to support your answer.
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" .

After you have completed E7-15, consider the following additional question.
1.	Assume that variable cost of goods sold for the Percy Division changed to $68,000 and fixed
	operating expenses changed to $27,500. There was no change to variable operating costs.
	How would these changes impact your answer?