Marriott Revenue CM Fixed COGS Selling and Admin Allocated Corporate Operating Income Current Parks Closed Difference A report containing part of this year's nancial results for ivemend Studios can be found in Table 1 below. The 'Selling and admin costs' listed in Table 1 are direct to each division (not allocated), and are xed (that is, they do not change with increased/decreased production). In addition to the current year data in Table 1, there are $2,000,000 in corporate costs that should be allocated evenly between the three divisions (the allocation may seem odd, but go with it). These costs are primarily due to employee benets costs, which are billed at the corporate level. If the Parks division is closed, the decreased employee base would reduce the $2,000,000 allocated corporate costs to $1,500,000. iyerpegi Studios has a cost of capital and required rate of return 12% and income is subject to a 25% income tax rate. Before she can make any decisions, Karen needs some answers. She schedules a Zoom meeting with you, the company's accountant. Table 1: mug-amend Studios current year data Entertainment Streaming Parks Revenues $54,583,520 $30,184,570 $7,564,270 Fixed COGS $3,356,850 $4,074,530 $3,159,430 Variable COGS $40,257,310 $22,020,695 $3,698,928 # of customers 15,264,200 1,420,060 30,240 # of employees 11,562 1,954 1,378 Average net operating assets $29,014,000 $19,252,000 $420,000 Selling and admin costs $3,259,520 $944,620 $231,900 For many years it was a popular year-round destination with characters, rides, and a hotel. The park has lost popularity in recent years, and has been 'in the red' for the past two years. If the park is not protable this year, Karen will need to decide whether iyerbend Studios would be better off permanently closing the division. Included in the 'Fixed COGS' for Parks is an annual $1,680,000 mortgage payment on the land and buildings for the park, which would still need to be paid if the park is closed. Incidentally, Karen recently had a conversation with a Marriott Hotels executive, who would like to expand into the area. If she decides to close Parks, she is fairly certain that the hotel facilities could be leased to Marriott for $650,000 annually