Problem 12-5 Martinez Company has four operating divisions. During the first quarter of 2017, the company reported aggregate income from operations of $212,400 and the following divisional results. 11 Sales Cost of goods sold Selling and administrative expenses Income (loss) from operations $250,000 204,000 74,600 $ (28,600) Division III $199,000 $498,000 191,000 295,000 63,000 60,000 $ (55,000) $143,000 IV $449,000 247,000 49,000 $153,000 Analysis reveals the following percentages of variable costs in each division. Cost of goods sold Selling and administrative expenses I 72% 40 II 88% 60 III 80% 51 IV 76% 61 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. x Your answer is incorrect. Try again. 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 Your answer is partially correct. Try again. Prepare an incremental analysis concerning the possible discontinuance of Division I. (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).) Continue Eliminate Net Income Increase (Decrease) Contribution margin Fixed costs Cost of goods sold Donna Selling and administrative Total fixed expenses Income (loss) from operations Your answer is partially correct. Try again. 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 Your answer is correct. What course of action do you recommend for each division? Division I Continued Division II TFlimi Eliminated