Question 2 (16 points) The Great Outdoors Company has 2 divisions with the following financial information: Division A Division B Contribution margin $1,547,500 $1,243,750 Operating Costs Administrative salaries 350,000 220,000 Selling salaries 250,000 800,600 Supplies 125,000 185,300 Depreciation of equipment 68,000 145,000 Delivery costs 68,000 52,000 Allocated corporate overhead 88,000 145,000 Total operating costs 949,000 1.547,900 Operating income (loss) $598,500 -$304,150 There is no resale value on the equipment The selling salaries, supplies, and delivery costs are available with respect to the sales generated Required Part A 1. If the Division B is discontinued, one administrative position could be eliminated, saving the company $105,000. Assuming no change in Division A's sales, what effect would dropping Division B have on the company's operating income? Prepare an incremental analysis to determine the impact on operating income. 2. Based on your analysis conclude on whether the Division B should be discontinued. Part B 1. Refer back to the original data. If Division B is dropped, it is estimated that Division A's sales would increase by 50%. The president believes that the administrative position could still be eliminated, saving the company $105,000. Equipment currently used by Division B would be used by Division A for the extra sales. Should Division B be discontinued? Prepare a total analysis to determine the impact on operating income. 2. Based on your analysis conclude on whether Division B should be discontinued