Problem 12-5 Riverbed Company has four operating divisions. During the first quarter of 2017, the company reported aggregate income from operations of $191,000 and the following divisional results. Division II III IV Sales Cost of goods sold Selling and administrative expenses Income (loss) from operations $250,000 205,000 70,000 $ (25,000) $198,000 190,000 64,000 $ (56,000) $496,000 297,000 61,000 $138,000 $443,000 255,000 54,000 $134,000 Analysis reveals the following percentages of variable costs in each division. Cost of goods sold Selling and administrative expenses I 69 % 37 II 89 % 61 III 80 % 51 IV 74 % 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. Income (loss) from operations (25000) (53825) (28825) LINK TO TEXT 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. 1. sign preceding the number e.g. -45 or parentheses e.g. (45).) Continue Eliminate Net Income Increase (Decrease) Contribution margin (10140) 10140 Fixed costs Cost of goods sold 20900 10450 10450 IL Selling and administrative 24960 12480 12480 Total fixed expenses 45860 22930 22930 Income (loss) from operations (56000) (22930) (78930) For the Quarter Ended March 31, 2017 A Divisions III IV Total Sales 496000 443000 1189000 Variable costs Cost of goods sold 141450 237600 188700 567750 Selling and administrative 25900 T 31110 31320 88330 Total variable costs 350] 167350 268710 220020 656080) 532920 Contribution margin 82650 227290 222980 532920 Fixed costs Cost of goods sold 63550 59400 66300 189250 Selling and administrative 44100 29890 22680 96670 Total fixed costs 107650 89290 88980 285920 Income (loss) from operations (25000) (138000) 134000 247000