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Exercise 20-15 Judy Jean, a recent graduate of Rolling's accounting program, evaluated the operating performance of Artie Company's six divisions. Judy made the following presentation
Exercise 20-15 Judy Jean, a recent graduate of Rolling's accounting program, evaluated the operating performance of Artie Company's six divisions. Judy made the following presentation to Artie's board of directors and suggested the Huron Division be eliminated. "If the Huron Division is eliminated," she said, "our total profits would increase by $25,700." The Other Five Divisions Huron Division Total Sales Cost of goods sold Gross profit Operating expenses Net income $1,664,450 $100,810 $1,765,260 1,054,150 711,110 577,860 133,250 76,930 23,880 49,580 $ 158,950 (25,700) 977,220 687,230 528,280 In the Huron Division, cost of goods sold is $59,100 variable and $17,830 fixed, and operating expenses are $25,700 variable and $23,880 fixed. None of the Huron Division's fixed costs will be eliminated if the division is discontinued
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