Sheridan Company has four operating divisions. During the first quarter of 2025, the company reported aggregate income from operations of $211,800 and the following divisional results. Sales Cost of goods sold Selling and administrative expenses Income (loss) from operations $253,000 | 203,000 I 75,200 Cost of goods sold Selling and administrative expenses 41 74 % || Division 58 $198,000 $505,000 195,000 57,000 $(25,200) $ (54,000) $149,000 91 % Analysis reveals the following percentages of variable costs in each division. ||| = 80 % 295,000 50 61,000 IV N 74 % 57 IV $445,000 253,000 50,000 $142,000 Discontinuance of any division would save 50% of the fixed costs and expenses for that division. Top management is very concerned about the unprofitable divisions (I and II). Consensus is that one or both of the divisions should be discontinued.

Sheridan Company has four operating divisions. During the first quarter of 2025 , the company reported aggregate income from operations of $211,800 and the following divisional results. Analysis reveals the following percentages of variable costs in each division. Discontinuance of any division would save 50% of the fixed costs and expenses for that division. Top management is very concerned about the unprofitable divisions (I and II). Consensus is that one or both of the divisions should be discontinued