operations of P8-4B. Dropping Unprofitable Division Based on the following analysis of last year's o company believes that the firm's total net income Groves, Inc., a financial vice president of the be increased by $160,000 if its design division were discontinued. (Amo of dollars.) unts are given in thousands Totals All Other Divisions Design Division $14,400 $4,400 Cost of services: (7,600) (4,800) $6,400 (5,600) (4,000) $ 4,800 (2,000) (800) $1,600 Gross profit Operating expenses: (3,360) (1,600) $1,440 (2,000) (1,200) (1,360) (400) Fixed.. $1,600 $ (160) Required Provide answers for each of the following independent situations: a. Assuming that total fixed costs and expenses would not be affected by discontinuing the design b. division, prepare an analysis showing why you agree or disagree with the vice president. Assume that discontinuance of the design division will enable the company to avoid 30% of the fixed portion division. Calculate the resulting effect on net income. of cost of services and 40% of the fixed operating expenses allocated to the design Asume that in addition to the cost avoidance in requirement (b), the capacity released by discon tinuance of the design division can be used to provide 6,000 new services that would have a v able cost per service of $60 and would require additional fixed costs totaling $68,000. At what unit price must the new service be sold if Groves is to increase its total C. ari- net income by $180,000? Product Emphasis McDermott Corporation manufactures both automatic and manual residential L6 water treatment units, Because of limited d