Question 3 Brislin Company has four operating divisions. During the first quarter of 2020, the company reported aggregate income from operations of $207,400 and the following divisional results. I IV Sales Cost of goods sold Selling and administrative expenses Income (loss) from operations $249,000 205,000 71,600 $ (27,600) Division II III $200,000 $498,000 192,000 305,000 60,000 59,000 $ (52,000) $134,000 $446,000 248,000 45,000 $153,000 Analysis reveals the following percentages of variable costs in each division. I II III IV 81 % Cost of goods sold Selling and administrative expenses 68 % 88 % 40 59 74 % 59 47 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. (a) Your answer is correct. Compute the contribution margin for Divisions I and II. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Division I Division II Contribution margin 80,960 -4,360 Click if you would like to Show Work for this question: Open Show Work SHOW SOLUTION SHOW ANSWER By accessing this Question Assistance, you will learn while you earn points based on the Point Potential Policy set by your instructor. Attempts: 1 of 3 used % Earn Maximum Points available only if you answer this question correctly in two attempts or less. (51) Your answer is correct. 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 80960 -80960 Fixed costs Cost of goods sold 65600 32800 32800 Selling and administrative 42960 21480 21480 7 1 1 Total fixed expenses 108560 54280 54280 17 Income (loss) from operations -27600 -54280 -26680 Click if you would like to Show Work for this question: Open Show Work (62) Your answer is correct. Prepare an incremental analysis concerning the possible discontinuance of Division II. (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 -4360 4360 Fixed costs Cost of goods sold 23040 11520 11520 Selling and administrative 24600 12300 12300 17 TE Total fixed expenses 47640 23820 23820 Income (loss) from operations -52000 -238201 28180 v (63) Your answer is correct. What course of action do you recommend for each division? Division I Continued Division II Eliminated Click if you would like to Show Work for this question: Open Show Work (c) Your answer is partially correct. Try again. Prepare a columnar condensed income statement for Brislin Company, assuming Division II is eliminated. Division II's unavoidable fixed costs are allocated equally to the continuing divisions. (Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.g. (45).) BRISLIN COMPANY CVP Income Statement For the Quarter Ended March 31, 2020 Divisions I III IV Total Sales 249000 498000 446000 1193000 Variable costs >
Cost of goods sold 139400 247050 183520 569970 > > > Selling and administrative 28640 27730 26550 82920 > > Total variable costs 168040 274780 210070 652890
