S OF S QUESTIONS REMAINING 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 sta Division be eliminated. "If the Riffa Division is eliminated," she said, "our total profits would increase by $20,000 The Other Four Divisions Riffa Division Sales $1,600,000 $110,000 Gra Cost of goods sold 950,000 80,000 Gross profit 650,000 Operating expenses 500,000 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: 30,000 50,000 Time Atter Tam 18 CARINE $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) Use the editor to format your