Pharoah, Inc. operates three divisions, Weak, Average, and Strong. As it turns out, the Weak division has the lowest operating income, and the president wants to close it. "Survival of the fittest, I say!" was his response when the Weak division's manager, insisted Kenneth, that his division earned money for the company. Following is the most recent financial analysis for each division:

		Weak			Average		Strong
Sales revenue		$125,900			$453,000		$548,100
Variable expenses		57,300			246,600		302,900
Contribution margin		68,600			206,400		245,200
Direct expenses		36,700			78,800		112,400
Allocated expenses		70,200			70,200		70,200
Operating income		$(38,300)			$57,400		$62,600

(a)

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revised income statement showing the segment margin for each division.

		Weak		Average		Strong		Total
select an income statement item Direct costsSalesOperating incomeSegment marginAllocated expenseVariable expenseContribution margin		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
select an income statement item Variable expenseSegment marginOperating incomeAllocated expenseSalesContribution marginDirect expense		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
select a summarizing line for the first part Allocated expenseSalesContribution marginOperating incomeDirect expenseVariable expenseSegment margin		enter a total amount for the first part		enter a total amount for the first part		enter a total amount for the first part		enter a total amount for the first part
select an income statement item Contribution marginOperating incomeSegment marginVariable expenseSalesDirect expenseAllocated expense		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
select a summarizing line for the second part Direct expenseSalesAllocated expenseVariable expenseContribution marginOperating incomeSegment margin		$enter a total amount for the second part		$enter a total amount for the second part		$enter a total amount for the second part		enter a total amount for the second part
select an income statement item Direct expenseSegment marginAllocated expenseVariable expenseSalesContribution marginOperating income								enter a dollar amount
select a closing name for this statement Allocated expenseDirect expenseSalesContribution marginOperating incomeVariable expenseSegment margin								$enter a total amount for this statement

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(b)

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By how much would total income change if the Weak division were dropped?

Total income will select an option increasedecrease by $enter a dollar amount .

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(c)

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Based on the way allocated expenses are divided among the divisions, what do you think will happen to the Average division if the company continues to prepare financial statements in this way, assuming Weak was dropped?

If Weak is dropped, then Average will report allocated expenses of $enter a dollar amount , resulting in an select an option operating incomeoperating loss of $enter a dollar amount for th