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Need some help with the following question, thanks! Wildhorse Company has four operating divisions. During the first quarter of 2022, the company reported aggregate income
Need some help with the following question, thanks!
Wildhorse Company has four operating divisions. During the first quarter of 2022, the company reported aggregate income from operations of $ 214,000 and the following divisional results. Division IV Sales $ 249,000 $ 200,000 $ 504,000 $ 450,000 Cost of goods sold 199,000 192,000 296,000 249,000 Selling and administrative expenses 76,000 63,000 64,000 50,000 Income (loss) from operations $ ( 26,000) $ (55,000) $ 144,000 $ 151,000 Analysis reveals the following percentages of variable costs in each division. IV Cost of goods sold 74 % 88 % 79 % 74 % Selling and administrative expenses 39 60 51 61 Discontinuance of any division would save 50% of the fixed costs and expenses for that division. Top management is very concerned about the unprofitable divisions (I and II). Consensus is that one or both of the divisions should be discontinued. (a) Compute the contribution margin for Divisions I and II. (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 $Step by Step Solution
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