Exercise 15-17 (Algo) Segmented Income statement LO 8 The president of Ravens Inc. attended a seminar about the contribution margin model and returned to her company full of enthusiasm about It She requested that last year's traditional model income statement be revised and she received the following report Division Sales Variable expenses Contribution margin Fixed expenses Net Income (loss) Total Company $490,000 266,000 $224,000 175,080 $ 49, eee $190,000 109,000 $ 81,000 55,000 $ 26,000 $130, eee 66,600 $ 64,000 69,00 $(5,000) $170,eee 91,000 $ 79,000 51,00 $ 28,000 The president was told that the fixed expenses of $175,000 Included $96,000 that had been split evenly between divisions because they were general corporate expenses. After looking at the statement, the president exclaimed. "I knew it Division B is a drag on the whole company. Close it down!" Required: a. Evaluate the president's remark The president's remark ignores the misleading result of arbitrarlly allocated fixed expenses. O The president's remark ignores the misleading result of arbitrarily allocated variable expenses. b. Calculate what the company's net income would be if Division B were closed down. Net income without Division 8 What is the policy statement related to the allocation of fixed expenses. Never arbitranly allocate fixed expenses