Ivanhoe Hospital provided the following income statement for two of its divisions: Diagnostic and Outpatient. Revenue Variable expenses Product Selling and administrative Contribution margin Less fixed costs Operating income (a1) Diagnostic $ 549,000 235,000 Fixed costs $ 165,000 149,000 195,000 Outpatient $ 449,000 155,000 95,000 Diagnostic 199,000 140,000 $ (46,000) $ 59,000 Total $ 998,000 390,000 260,000 The CEO of the hospital is not pleased with the division's performance, and he believes that the Diagnostic division is responsible # its dismal result and wants to consider outsourcing diagnostic procedures. Outpatient 348,000 335,000 $ 13,000 The controller has determined that the hospital's headquarters allocated $113,000 and $47,000 in common administrative fixed costs, respectively, to Diagnostic and Outpatient divisions.

Ivanhoe Hospital provided the following income statement for two of its divisions: Diagnostic and Outpatient. The CEO of the hospital is not pleased with the division's performance, and he believes that the Diagnostic division is responsible its dismal result and wants to consider outsourcing diagnostic procedures. (a1) The controller has determined that the hospital's headquarters allocated $113,000 and $47,000 in common administrative fixed costs, respectively, to Diagnostic and Outpatient divisions