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Oriole Forest Corporation operates two divisions, the Timber Division and the Consumer Division. The Timber Division manufactures and sells logs to paper manufacturers. The Consumer
Oriole Forest Corporation operates two divisions, the Timber Division and the Consumer Division. The Timber Division manufactures and sells logs to paper manufacturers. The Consumer Division operates retail lumber mills which sell a variety of products in the do-it-yourself homeowner market. The company is considering disposing of the Consumer Division since it has been consistently unprofitable for a number of years. The income statements for the two divisions for the year ended December 31, 2022 are presented below: Timber Division Consumer Division Total Sales $1,650,000 $550,000 $2,200,000 Cost of goods sold 990,000 385,000 1,375,000 Gross profit 660,000 165,000 825,000 Selling & administrative expenses 69,300 198,000 267,300 Net income $590,700 $(106,700) $484,000 In the Consumer Division, 70% of the cost of goods sold are variable costs and 35% of selling and administrative expenses are variable costs. The management of the company feels it can save $49,500 of fixed cost of goods sold and $55,000 of fixed selling expenses if it discontinues operation of the Consumer Division. (a) Determine whether the company should discontinue operating the Consumer Division. (Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45). Do not leave any field blank. Enter o for the amounts. List variable expenses before fixed expenses.) Net Incor Increase (Dec Continue Eliminate . $ $ $ $ $ $ The company continue the Consumer Division. Oriole Forest Corporation operates two divisions, the Timber Division and the Consumer Division. The Timber Division manufactures and sells logs to paper manufacturers. The Consumer Division operates retail lumber mills which sell a variety of products in the do-it-yourself homeowner market. The company is considering disposing of the Consumer Division since it has been consistently unprofitable for a number of years. The income statements for the two divisions for the year ended December 31, 2022 are presented below: Timber Division Consumer Division Total Sales $1,650,000 $550,000 $2,200,000 Cost of goods sold 990,000 385,000 1,375,000 Gross profit 660,000 165,000 825,000 Selling & administrative expenses 69,300 198,000 267,300 Net income $590,700 $(106,700) $484,000 In the Consumer Division, 70% of the cost of goods sold are variable costs and 35% of selling and administrative expenses are variable costs. The management of the company feels it can save $49,500 of fixed cost of goods sold and $55,000 of fixed selling expenses if it discontinues operation of the Consumer Division. (a) Determine whether the company should discontinue operating the Consumer Division. (Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45). Do not leave any field blank. Enter o for the amounts. List variable expenses before fixed expenses.) Net Incor Increase (Dec Continue Eliminate . $ $ $ $ $ $ The company continue the Consumer Division
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