Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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 $25,790.?
The Other Five DivisionsHuron DivisionTotal
Sales$1,663,020$100,350$1,763,370
Cost of goods sold978,76076,1201,054,880
Gross profit684,26024,230708,490
Operating expenses526,49050,020576,510
Net income$157,770$ (25,790)$131,980
In the Huron Division, cost of goods sold is $60,700 variable and $15,420 fixed, and operating expenses are $24,700 variable and $25,320 fixed. None of the Huron Division?s fixed costs will be eliminated if the division is discontinued. Prepare an incremental analysis. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
ContinueEliminateNet Income Increase (Decrease)
Sales$$$
Variable costs
Cost of goods sold
Operating expenses
Total variable
Contribution margin
Fixed costs
Cost of goods sold
Operating expenses
Total fixed
Net income (loss)$$$
Is Judy right about eliminating the Huron Division?
Judy is

Link to Text

image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Business Law

Authors: Henry Cheeseman

10th Edition

0134728785, 978-0134728780

More Books

Students also viewed these Accounting questions

Question

An improvement in the exchange of information in negotiations.

Answered: 1 week ago