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Sano Manufacturing Company has four operating divisions. During the first quarter of 2008, the company reported total income from operations of $61,000 and the following

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Sano Manufacturing Company has four operating divisions. During the first quarter of 2008, the company reported total income from operations of $61,000 and the following results for the divisions: Analysis reveals the following percentages of variable costs in each division. Discontinuance of any division would save 60% of the fixed costs and expenses for that division. Top management is deeply concerned about the unprofitable divisions (Denver and Seattle). The consensus is that one or both of the divisions should be eliminated. a. Compute the contribution margin for the two unprofitable divisions. b. Prepare an incremental analysis concerning the possible elimination of (1) the Denver Division and (2) the Seattle Division. What course of action do you recommend for each division? c. Prepare a columnar condensed income statement using the CVP format for Sano Manufacturing Company, assuming (1) the Seattle Division is eliminated, and (2) the unavoidable fixed costs and expenses of the Seattle Division are allocated 30% to Helena, 50% to Portland, and 20% to Denver. d. Compare the total income from operations with the Denver Division ($61,000) to total income from operations without this division

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