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Pat Lee. a recent graduate of a Bachelor of Business Program. is evaluating the operating performance of Popo lnc.. which has six divisions. The Erie
Pat Lee. a recent graduate of a Bachelor of Business Program. is evaluating the operating performance of Popo lnc.. which has six divisions. The Erie division is incurring a loss. 1.Nhile the other five divisions are all reporting health}.r profits. The following information has been made available to Pat Lee. Erie Division The other five divisions $96.26I $1.664.26I $1.?66.46I Cost of goods razo- erase-1.054.9- Gross profit 16.?3I 665.66I 265.41 I Operating 43.66I 522.64I 521.54I expenses Net Income ${23.6?'6II $152.?4I $133.66\" In the Erie Division. the cost of goods sold is $6666 variable and $6.426 fixed. and operating expenses are $15.666 variable and $26666 fixed. If the Erie division is closed. $16.666 of its total fixed costs 1would not be avoidable and 1would have to be absorbed by the five remaining divisions. 1} Prepare a contribution type income statement for the Erie Division. 2) Prepare an analysis to determine the impact on total profits if the Erie division is closed. { show all your calculations) 3) Should the Erie Division be closed
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