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Karim Ahmed, a recent graduate of an accounting program, evaluated the operating performance of Lunar Company's four divisions. Karim Ahmed made the following presentation to the Lunar board of directors and suggested the Riffa Division be eliminated. "If the Riffa Division is eliminated," she said, "our total profits would increase by "$10,000. The Other Four Divisions Riffa Division Sales $1,300,000 $90,000 Cost of goods sold 600,000 65,000 Gross profit 700,000 25,000 Operating expenses 350.000 35.000 Net income $350,000 ($10,000) In the Riffa Division, cost of goods sold is $45.000 variable and $20,000 fixed, and operating expenses are $20,000 variable and $15.000 fixed. None of the Riffa Division's fixed costs will be eliminated if the division is discontinued. A 120 minu S Attemps 1 attemp Assessm Respons Grading Ma Additiona Refresh th you submi Cost of goods sold 600,000 65,000 Gross profit 700,000 25,000 Operating expenses 350,000 35,000 Net income $350,000 ($10,000) In the Riffa Division, cost of goods sold is $45.000 variable and $20,000 fixed, and operating expenses are $20,000 variable and $15,000 fixed. None of the Riffa Division's fixed costs will be eliminated if the division is discontinued. Required: (1) Prepare an incremental analysis to eliminate or keep a division decision. (6.5 marks) (2) is Karim Ahmed right about eliminating the Riffa Division? Why or why not? (1.5 marks) Use the editor to format your answer 962 00: [ana Addit Refre you s