Sarah Mars, a recent graduate of Bells accounting program, evaluated the operating performance of Blossom Companys six divisions. Sarah made the following presentation to Blossoms board of directors and suggested the Percy Division be eliminated. If the Percy Division is eliminated, she said, our total profits would increase by $26,000.

		The Other Five Divisions		Percy Division			Total
Sales		$1,663,000		$100,600			$1,763,600
Cost of goods sold		979,000		76,400			1,055,400
Gross profit		684,000		24,200			708,200
Operating expenses		526,800		50,200			577,000
Net income		$157,200		$ (26,000	)		$131,200

In the Percy Division, cost of goods sold is $60,500 variable and $15,900 fixed, and operating expenses are $30,000 variable and $20,200 fixed. None of the Percy Divisions fixed costs will be eliminated if the division is discontinued. Is Sarah right about eliminating the Percy Division? Prepare a schedule to support your answer. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

		Continue		Eliminate		Net Income Increase (Decrease)
Sales		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
Variable costs
Cost of goods sold		enter a dollar amount		enter a dollar amount		enter a dollar amount
Operating expenses		enter a dollar amount		enter a dollar amount		enter a dollar amount
Total variable		enter a subtotal of the two previous amounts		enter a subtotal of the two previous amounts		enter a subtotal of the two previous amounts
Contribution margin		enter a total amount for the first part		enter a total amount for the first part		enter a total amount for the first part
Fixed costs
Cost of goods sold		enter a dollar amount		enter a dollar amount		enter a dollar amount
Operating expenses		enter a dollar amount		enter a dollar amount		enter a dollar amount
Total fixed		enter a subtotal of the two previous amounts		enter a subtotal of the two previous amounts		enter a subtotal of the two previous amounts
Net income (loss)		$enter a total net income or loss amount		$enter a total net income or loss amount		$enter a total net income or loss amount