Problem 20-05A a, b1-b3, c (Part Level Submission)

Brislin Company has four operating divisions. During the first quarter of 2020, the company reported aggregate income from operations of $232,400 and the following divisional results.

		Division
		I		II		III		IV
Sales		$245,000		$195,000		$495,000		$443,000
Cost of goods sold		195,000		189,000		295,000		245,000
Selling and administrative expenses		67,600		54,000		55,000		45,000
Income (loss) from operations		$ (17,600)		$ (48,000)		$145,000		$153,000

Analysis reveals the following percentages of variable costs in each division.

		I			II			III			IV
Cost of goods sold		66	%		87	%		77	%		73	%
Selling and administrative expenses		37			57			47			57

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.

(b1)

	Your answer is partially correct. Try again.

Prepare an incremental analysis concerning the possible discontinuance of Division I. (Enter negative amounts 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
Selling and administrative
Total fixed expenses
Income (loss) from operations		$		$		$