Problem 125 Swifty Company has four operating divisions. During the first quarter of 2017, the company reported aggregate income from operations of $215,000 and the following divisional results. Division Sales Cost of goods sold Selling and administrative expenses Income (loss) from operations $249,000 199,000 76.000 5 (26,000) $200,000 191,000 63,000 5 (54,000) $504,000 290,000 64.000 $144.000 $450,000 249,000 50.000 5151,000 Analysis reveals the following percentages of variable costs in each division 1 Cost of goods sold Selling and administrative expenses 74 39 11 88% 50 THI 79 51 IV 74 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 and I). Consensus is that one or both of the divisions should be discontinued 0.45 or parentheses e.o. Compute the contribution margin for Divisions and II. (Enter negative amounts using either a negative ston preceding the number (45)) CALCULATOR FULL SCREEN PRINTER VERSION BACK NEXT SOURCES ment Compute the contribution margin for Divisions I and II. (Enter negative amounts using either a negative sin preceding the number eg. 45 or parentheses e.o. (45)) Division II Division 1 72100 Contribution margin 5880 by Study Prepare an incremental analysis concerning the possible discontinuance of Division 1. (Round ansvers to decimal places, 01525. If amount decreases net income then enter the amount using either a negative son preceding the number eg. 45 or parentheses e.. (45).) Continue Eliminate Net Income increase (Decrease) Contribution margin 22100 Fixed costs Cost of goods sold Selling and administrative Totalfixed expenses income (loss) from operations Prepare an incremental analysis concerning the possible discontinuance of Division 1 (Round answers to o decimal places, eg. 1525. Il amount decreases net income then enter the amount using either a negative sign preceding the number 0-45 ar parentheses (45).) Continue Eliminate Increase (Decrease) Contribution margin Fixed costs Cost of goods sold Study Seling and administrative Totalfied expenses Income oss) from operations LIETO TEXT Prepare an incremental analysis concerning the possible discontinuance of Division II (Round answers to decimal places, o. 1525. If amount decreases net income then enter the amount using either a negative sion preceding the number.o. 45 or parentheses eg. (45).) Continue Eliminate Net Income increase (Decrease) Contribution margin tudy Fixed costs Cost of goods sold 22920 11460 11460 Selling and administrative 25200 Totalfixed expenses 18120 24050 Income (loss) from operations -54000 What course of action do you recommend for each division Division Division 11 CALCULATOR FULL SCREEN PRINTER VERSION OURCES CVP Income Statement Divisions TIL TV Total ey Study Variable costs Cost of goods sold Selling and administrative Total variable costs Contribution margin Fixed costs Cost of goods sold Selling and administrative Total xed costs Income (less) from operations