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please help me to solve this problem Patty Lee, a recent graduate of a Bachelor of Business Program, is evaluating the operating performance of Popo
please help me to solve this problem
Patty Lee, a recent graduate of a Bachelor of Business Program, is evaluating the operating performance of Popo Inc., which has six divisions. The Erie division is incurring a loss, while the other five divisions are all reporting healthy profits. The following information has been made available to Patty Lee. Erie The other POPO Inc. Division five TOTAL divisions $96,200 $1,664,200 $1,760,400 76,470 978,520 1,054,990 Sales Cost of goods sold 19,730 685,680 705,410 Gross profit 43,600 527,940 571,540 Operating expenses $(23,870) $157,740 $133,870 Net Income In the Erie Division, the cost of goods sold is $75,000 variable and $1,470 fixed, and operating expenses are $15,000 variable and $28,600 fixed. If the Erie division is closed, $ 8,000 of its total fixed costs would not be avoidable and would have to be absorbed by the five remaining divisions. Required: You must show all your calculations in order to get marks. If you provide the answer only you will not receive any marks. 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? 7 A B 1 & Step by Step Solution
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