Just do number 2

Question 1 Layton Corporation operates two divisions, the A Division and the B Division. Both divisions manufacture and sell logs to paper manufacturers. The company is considering disposing of the B Division since it has been consistently unprofitable for a number of years. The income statements for the two divisions for the year ended December 31, 2015 are presented below: Sales Cost of goods sold Gross profit Selling & administrative expenses Net income A Division $400,000 150,000 250,000 200.000 S 50,000 B Division $300,000 200,000 100,000 . Total- $700,000 350,000 350,000 120,000 320,000 $(20.000)30,000 Assume that in each division, 80% of cost of goods sold is variable costs and 20% of selling and administrative expenses are variable costs. The remaining costs include 50 % of traceable costs. Required (15 marks total): 1. (8 marks) Redo the income statement using the contribution format. 2. (7 marks) Management feels it can save 60 % of all traceable costs if it discontinues operation of the B Division. Determine whether the company should discontinue operating the B Division