Return The president of Ravens Inc. attended a seminar about the contribution margin model and returned...

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Return The president of Ravens Inc. attended a seminar about the contribution margin model and returned to her company full of enthusiasm about it. She requested that last year's traditional model income statement be revised, and she received the following report: Division Sales Variable expenses Contribution margin Fixed expenses Total Company $484,000 268,000 $216,000 172,000 A $188,000 112,000 $ 76,000 54,000 Net income (loss) $ 44,000 $ 22,000 B $128,000 66,000 $ 62,000 68,000 $ (6,000) $168,000 90,000 $ 78,000 50,000 $ 28,000 The president was told that the fixed expenses of $172,000 included $94,500 that had been split evenly between divisions because they were general corporate expenses. After looking at the statement, the president exclaimed, "I knew it! Division B is a drag on the whole company. Close it down!" Required: a. Evaluate the president's remark. The president's remark ignores the misleading result of arbitrarily allocated fixed expenses. The president's remark ignores the misleading result of arbitrarily allocated variable expenses. Return The president of Ravens Inc. attended a seminar about the contribution margin model and returned to her company full of enthusiasm about it. She requested that last year's traditional model income statement be revised, and she received the following report: Division Sales Variable expenses Contribution margin Fixed expenses Total Company $484,000 268,000 $216,000 172,000 A $188,000 112,000 $ 76,000 54,000 Net income (loss) $ 44,000 $ 22,000 B $128,000 66,000 $ 62,000 68,000 $ (6,000) $168,000 90,000 $ 78,000 50,000 $ 28,000 The president was told that the fixed expenses of $172,000 included $94,500 that had been split evenly between divisions because they were general corporate expenses. After looking at the statement, the president exclaimed, "I knew it! Division B is a drag on the whole company. Close it down!" Required: a. Evaluate the president's remark. The president's remark ignores the misleading result of arbitrarily allocated fixed expenses. The president's remark ignores the misleading result of arbitrarily allocated variable expenses.