Question 3 Karim Ahmed, a recent graduate of an accounting program, evaluated the operating performance of Lunar Company's four divisions. Karim Ahmed made the following presentation to the Lunar board of directors and suggested the Riffa Division be eliminated. "If the Riffa Division is eliminated," she said, "our total profits would increase by "$20,000. The Other Four Riffa Divisions Division Sales $1,600,000 $110,000 Cost of goods sold 950,000 80,000 650,000 30,000 Gross profit Operating expenses 500,000 50,000 Net Income. $150,000 ($20,000) in the Riffa Division, cost of goods sold is $65,000 variable and $15,000 fixed, and operating expenses are $40,000 variable and $10,000 fixed. None of the Riffa Division's fixed costs will be eliminated if the division is discontinued. Required: (1) Prepare an incremental analysis to eliminate or keep a division decision. (6.5 marks) (2) Is Karim Ahmed right about eliminating the Riffa Division? Why or why not? (1.5 marks) For the toolbar, press ALT-FID (PC) or ALT-FN+F10 (Mad BIVS Paragraph Arial 10pt AV LV I. XO av. 14 #T AT " B M FA AT #O 39 AG (8 Ih E * (1) 3 4