Kimberly Mars, a recent graduate of Bells accounting program, evaluated the operating performance of Crane Companys six divisions. Kimberly made the following presentation to Cranes board of directors and suggested the Percy Division be eliminated. If the Percy Division is eliminated, she said, our total profits would increase by $27,000.

Kimberly Mars, a recent graduate of Bells accounting program, evaluated the operating performance of Crane Companys six divisions. Kimberly made the following presentation to Cranes board of directors and suggested the Percy Division be eliminated. If the Percy Division is eliminated, she said, our total profits would increase by $27,000.

		The Other Five Divisions		Percy Division			Total
Sales		$1,663,000		$100,300			$1,763,300
Cost of goods sold		978,700		76,800			1,055,500
Gross profit		684,300		23,500			707,800
Operating expenses		527,700		50,500			578,200
Net income		$156,600		$ (27,000	)		$129,600

In the Percy Division, cost of goods sold is $60,000 variable and $16,800 fixed, and operating expenses are $30,800 variable and $19,700 fixed. None of the Percy Divisions fixed costs will be eliminated if the division is discontinued. Is Kimberly right about eliminating the Percy Division? Prepare a schedule to support your answer. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

		Continue		Eliminate		Net Income Increase (Decrease)
Sales		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
Variable costs
Cost of goods sold		enter a dollar amount		enter a dollar amount		enter a dollar amount
Operating expenses		enter a dollar amount		enter a dollar amount		enter a dollar amount
Total variable		enter a subtotal of the two previous amounts		enter a subtotal of the two previous amounts		enter a subtotal of the two previous amounts
Contribution margin		enter a total amount for the first part		enter a total amount for the first part		enter a total amount for the first part
Fixed costs
Cost of goods sold		enter a dollar amount		enter a dollar amount		enter a dollar amount
Operating expenses		enter a dollar amount		enter a dollar amount		enter a dollar amount
Total fixed		enter a subtotal of the two previous amounts		enter a subtotal of the two previous amounts		enter a subtotal of the two previous amounts
Net income (loss)		$enter a total net income or loss amount		$enter a total net income or loss amount		$enter a total net income or loss amount

Kimberly is select an option correctincorrect