Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Nicole Filippas, a recent graduate of Rollings University's accounting program, evaluated the operating performance of Poway Company's six divisions. Nicole made the following presentation to
Nicole Filippas, a recent graduate of Rollings University's accounting program, evaluated the operating performance of Poway Company's six divisions. Nicole made the following presentation to Poway's board of directors and suggested the Erie division be eliminated. "If the Erie division is eliminated," she said, "our total profits would increase by $23,800! Sales Cost of goods sold Gross profit Operating expenses Net income The Other Five Divisions $1,663,000 978,400 *684,600 527,000 $157,600 Erie Division $100,700 76,200 24,500 48,300 $(23,800 Total $1763,700 1,054,600 709,100 575,300 $133,800 In the Erie division, the cost of goods sold is $60,900 variable and $15.300 fixed, and operating expenses are $15,400 variable and $32,900 fixed. None of the Erie division's fixed costs will be eliminated if the division is discontinued Is Nicole right about eliminating the Erie Division? Prepare a schedule to supportyour answer. (If an amount reduces the net income then enter with a negative sign preceding the number eg. 15,000 or parenthesis, eg. (15,000).) Is Nicole right about eliminating the Erie Division? Prepare a schedule to support your answer. (If an amount reduces the net income then enter with a negative sign preceding the number 4.8.-15,000 or parenthesis, eg: (15,000).) Net Income Increase (Decrease) Continue Eliminate S V
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started