Problem 6-29A Effect of activity level and opportunity cost on segment elimination decision CHECK FIGURE Lenox Manufacturing Co. produces and sells specialized equipment used in the petroleum industry. The company is organized into three separate operating branches: Division A, which manufactures and sells heavy equipment; Division B, which manufactures and sells hand tools; and Division C, which makes and sells electric motors. Each division is housed in a separate manufacturing facility Company headquarters is located in a separate building. In recent years, Division B has beern operating at a net loss and is expected to continue to do so. Income statements for the three divisions for 2016 follow. a. Contribution to profit: $(9,000) Page 289 Division A Division B Division C Sales $1,000,000 300,000 $1,250,000 Less: Cost of goods sold (600,000) (135,000) 265,000 (200,000) 750,000) Unit-level manufacturing costs Rent on manufacturing facility -(75,000) 25,000 -(100000) Gross margin Less: Operating expenses 400,000 Unit-level selling and admin. expenses Division-level fixed selling and (62,500) (80,000) (20,000)10 (78,000) (100,000) (14,000) admin. expenses Headquarters facility-level costs (50,000) (50,000) (50,000) $72,500 (59,000) $172,000 Net income (loss)