Need help with income statement. Also need to find net income for income statement. Last part was cut off.
Problem 7-5 (Part Level Submission) Pina Company has four operating divisions. During the rst quarter of 2017, the company reported aggregate income from operations of $212,300 and the following divisional results. Division I II III IV Sales $254,000 $199,000 $501,000 $443,000 Cost of goods sold 204,000 190,000 301,000 247,000 Selling and administrative expenses 69,700 61,000 57,000 55,000 Income (loss) from operations $ (19,700) $ (52,000) $143,000 $141,000 Analysis reveals the following percentages of variable costs in each division. I II III IV Cost of goods sold 67 % 90 % 82 % 75 % Selling and administrative expenses 39 62 50 58 Discontinuance of any division would save 50% of the xed costs and expenses for that division. Top management is very concerned about the unprotable divisions (I and II). Consensus is that one or both of the divisions should be discontinued. v (a) Your answer is correct. Compute the contribution margin for Divisions I and 11. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Division I Division II Contribution margin $ 90,137 $ (9,820) v (b1) Your answer is correct. Prepare an incremental analysis concerning the possible discontinuance of Division I. (Round answers to a decimal places, e.g. 1525. If amount decreases net income then enter the amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Income (loss) from operations -19,700 V) -35,219 Net Income Continue Eliminate Increase (Decrease) d v Contribution margin $ 90,137 $ $ (90,137) Fixed costs ~/ Cost of goods sold 67,320 E w v v Selling and administrative 42,517 21,259 21,258 ~/ ~/ Total xed expenses 109,837 54,919 54,918 v v $m | +9 V (b2) Your answer is correct. Prepare an incremental analysis concerning the possible discontinuance of Division 11. (Round answers to 0 decimal places, e.g. 1525. If amount decreases net income then enter the amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net Income Continue Eliminate Increase (Decrease) Contribution mar in -9820 9820 9 $ $ $ Fixed costs J J J Cost of goods sold 19000 m m ~/ ~/ ~/ Selling and administrative 23180 11590 11590 J J J Total xed expenses 42180 21090 21090 J J J Income (loss) from operations $ -52000 $ ~21090 $ 30910 v (b3) Your answer is correct. What course of action do you recommend for each division? Division II Eliminated v' V (c) Prepare a columnar condensed income statement for Pina Company, assuming Division II is eliminated. Division II's unavoidable fixed costs are allocated equally to the continuing divisions. (If amount decreases net income then enter the amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) PINA COMPANY CVP Income Stateme DiVISIons I III IV Total Sales Variable costs Cost of goods sold Selling and administrative Total variable costs Contribution margin Fixed costs Cost of goods sold Selling and administrative Total xed costs
