Question
Please help me fill out these tables for accounting, thanks! Indigo Company has four operating divisions. During the first quarter of 2017, the company reported
Please help me fill out these tables for accounting, thanks!
Indigo Company has four operating divisions. During the first quarter of 2017, the company reported aggregate income from operations of $218,700 and the following divisional results.
Division | |||||||||
I | II | III | IV | ||||||
Sales | $250,000 | $198,000 | $499,000 | $447,000 | |||||
Cost of goods sold | 195,000 | 194,000 | 298,000 | 250,000 | |||||
Selling and administrative expenses | 70,300 | 62,000 | 57,000 | 49,000 | |||||
Income (loss) from operations | $ (15,300) | $ (58,000) | $144,000 | $148,000 |
Analysis reveals the following percentages of variable costs in each division.
I | II | III | IV | ||||||||||
Cost of goods sold | 74 | % | 92 | % | 78 | % | 73 | % | |||||
Selling and administrative expenses | 37 | 57 | 51 | 59 |
Discontinuance of any division would save 50% of the fixed costs and expenses for that division. Top management is very concerned about the unprofitable divisions (I and II). Consensus is that one or both of the divisions should be discontinued.
Indigo Company has four operating divisions. During the first quarter of 2017, the company reported aggregate income from operations of $218,700 and the following divisional results. IV Sales Division II III $198,000 $499,000 194,000 298,000 62,000 57,000 $ (58,000) $144,000 $250,000 195,000 70,300 $ (15,300) Cost of goods sold $447,000 250,000 49,000 $148,000 Selling and administrative expenses Income (loss) from operations Analysis reveals the following percentages of variable costs in each division. Cost of goods sold Selling and administrative expenses I 74 % 37 II 92 % 57 III 78 % 51 I 73 % 59 Discontinuance of any division would save 50% of the fixed costs and expenses for that division. Top management is very concerned about the unprofitable divisions (I and II). Consensus is that one or both of the divisions should be discontinued. Compute the contribution margin for Divisions I and II. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Division I Division II Contribution margin $ LINK TO TEXT Prepare an incremental analysis concerning the possible discontinuance of Division I. (Round answers to O decimal places, e.g. 1525. If amount decreases net income then enter the amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Continue Eliminate Net Income Increase (Decrease) Contribution margin Fixed costs Cost of goods sold Selling and administrative Total fixed expenses Income (loss) from operations Prepare an incremental analysis concerning the possible discontinuance of Division II. (Round answers to 0 decimal places, e.g. 1525. If amount decreases net income then enter the amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net Income Increase (Decrease) Continue Eliminate Contribution margin Fixed costs Cost of goods sold Selling and administrative Total fixed expenses Income (loss) from operations LINK TO TEXT What course of action do you recommend for each division? Division I Division II Prepare a columnar condensed income statement for indigo company, assuming DIVISION II is eliminated. Division 11% unavoidable fixed costs are allocated equally to the continuing divisions. ( amount decreases net income then enter the amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) INDIGO COMPANY CVP Income Statement Divisions Sales Variable costs Cost of goods sold Selling and administrative Total variable costs Contribution margin Fixed costs Cost of goods sold Selling and administrative Total fixed costs Income (less) from operationsStep by Step Solution
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