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prepare a columnar condensed incone statment for ...., assuming division II is eliminated. division II's unavoidable fixed costs are allocated equally to the continuing division
prepare a columnar condensed incone statment for ...., assuming division II is eliminated. division II's unavoidable fixed costs are allocated equally to the continuing division Question 3 Brisin Company has four operating divisions. During the first quarter of 2020, the company reported aggregate income from operations of $193,000 and the following divisional results. Division II III IV Sales $250,000 $198,000 $496,000 $443,000 Cost of goods sold 205,000 189,000 297,000 255,000 Selling and administrative expenses 70,000 63,000 61,000 54,000 Income (loss) from operations $(25,000) $ (54,000) $138,000 $134,000 Analysis reveals the following percentages of variable costs in each division I II III IV Cost of goods sold 69% 89% 80% 74% Selling and administrative expenses 37 61 51 58 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. (a) BRISLIN COMPANY CVP Income Statement For the Quarter Ended March 31, 2020 Divisions 1 III IV Total Sales 250000 496000 443000 1189000 Variable costs . Cost of goods sold 141450 237600 185700 567750 25900 31110 31320 38330 167350 268710 220020 656080 82650 227290 222980 522920 Selling and administrative Total variable costs Contribution margin Fixed costs Cost of goods sold Selling and administrative 107650 89290 88980 285920 7560 7560 7560 22680 Total fixed costs 115210 96850 96540 300600 Income (loss) from operations (32560) 130440 126440 224320
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