Question 1 Ribeiro Manufacturing Company has four operating divisions. During the first quarter of 2020, the company reported aggregate income from operations of $172,500 and the following divisional results: Division I II III IV Sales $507,200 $400,700 $311,500 $179,500 Cost of goods sold 298,800 244,300 271,600 151,800 Selling and administrative expenses 55,600 71,200 61,800 71,300 Income (loss) from operations $152,800 $85,200 $(21,900) $(43,600) The analysis reveals the following percentages of variable costs in each division: I II III IV 70% 89% 74% 91% Cost of goods sold Selling and administrative expenses 42 48 65 70 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 (III and IV). The consensus is that the company should discontinue one or both of these divisions. Calculate the contribution margin for divisions III and IV. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Divisions III Divisions IV Contribution margin Prepare an incremental analysis for the possible discontinuance of (1) division III and (2) division IV. (Round answers to 0 decimal places, e.g. 125. Enter all negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) (1) Division III Income Increase (Decrease) Division III: Keep Div. III Shut Div. III Contribution margin Fixed costs Totals $ (2) Division IV Income Increase (Decrease) Division IV: Keep Div. IV Shut Div. IV Contribution margin $ Fixed costs Totals $ what course of action do you recommend for each division? Division III should be Division IV should be Prepare a condensed income statement in columns for Ribeiro Manufacturing, assuming division IV is eliminated. Use the CVP format. Division IV's unavoidable fixed costs are allocated equally to the continuing divisions. (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) RIBEIRO MANUFACTURING COMPANY CVP Income Statement Div I Div II Div III Total Reconcile the total income from operations of $172,500 with the total income from operations without division IV. Income from operations with Division IV Incremental income from eliminating Division IV Income from operations without Division IV $