Question 4: Cassie's Clowns produces clown costumes and other party favors and supplies and has three divisions - Funny, Scary and Sad. Based on the latest information presented to the CEO by the controller, a discussion has ensued as to the fate of the Scary division. The division is operating at a loss. The manager of the Scary Division, Vam Pire, argues that his division is profitable and that the company will be worse off it they close the Scary Division. Here is the latest information for Cassie's Clowns: Funny Scary Sad Total Sales $850,000 $693,000 $480,000 $2,023,000 Variable Prod.costs 290,000 340,000 115,000 745,000 Fixed Prod. costs 86,000 120,000 25,000 231,000 Variable S&A costs 102,000 165,000 37,000 304,000 Fixed S & A costs 58,000 94,000 42,000 194,000 Of the fixed S&A costs, 15% represent common costs that have been allocated equally to each product line. In addition, 25% of Scary's fixed production costs are unavoidable as these are fixed costs associated with facilities and equipment shared by all three divisions. A. Is Vam Pire correct should the Scary Division be kept or eliminated? Why or why not? B. What would be total corporate income if Scary Division is eliminated currently? C. What are two areas Cassie and in particular Scary's management should look at to improve Scary's bottom line? D. What are three qualitative things that Cassie should consider when deciding if a division is eliminated