Linda Williams, a recent graduate of Bells accounting program, evaluated the operating performance of Cullumber Companys six divisions. Linda made the following presentation to Cullumbers board of directors and suggested the Percy Division be eliminated. If the Percy Division is eliminated, she said, our total profits would increase by $26,100.

		The Other Five Divisions		Percy Division			Total
Sales		$1,663,000		$100,900			$1,763,900
Cost of goods sold		977,300		76,800			1,054,100
Gross profit		685,700		24,100			709,800
Operating expenses		528,400		50,200			578,600
Net income		$157,300		$ (26,100	)		$131,200

In the Percy Division, the cost of goods sold is $59,500 variable and $17,300 fixed, and operating expenses are $31,000 variable and $19,200 fixed. None of the Percy Divisions fixed costs will be eliminated if the division is discontinued. Is Linda 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		$_________________		$_________________		$_________________
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)		$_________________		$_________________		$_________________

Linda is __________( incorrect or correct)