Sheridan Company has four operating divisions. During the first quarter of 2022, the company reported aggregate income from operations of $211,800 and the following divisional results.

		Division
		I		II		III		IV
Sales		$253,000		$198,000		$505,000		$445,000
Cost of goods sold		203,000		195,000		295,000		253,000
Selling and administrative expenses		75,200		57,000		61,000		50,000
Income (loss) from operations		$ (25,200)		$ (54,000)		$149,000		$142,000

Analysis reveals the following percentages of variable costs in each division.

		I			II			III			IV
Cost of goods sold		74	%		91	%		80	%		74	%
Selling and administrative expenses		41			58			50			57

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.

(a)

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Partially correct answer iconYour answer is partially correct.

Compute the contribution margin for Divisions I and II. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

		Division I		Division II
Contribution margin		$enter contribution margin in dollars??		$enter contribution margin in dollars ??

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(b1)

Prepare an incremental analysis concerning the possible discontinuance of Division I. (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)
Contribution margin		$enter a dollar amount ??		$enter a dollar amount ??		$enter a dollar amount ??
Fixed costs
Cost of goods sold		enter a dollar amount?		enter a dollar amount??		enter a dollar amount??
Selling and administrative		enter a dollar amount ??		enter a dollar amount??		enter a dollar amount??
Total fixed expenses		enter a total dollar amount for the previous two amounts??		enter a total dollar amount for the previous two amounts?		enter a total dollar amount for the previous two amounts??
Income (loss) from operations		$enter income or loss from operations amouont in dollar ??		$enter income or loss from operations amouont in dollar ?		$enter income or loss from operations amouont in dollar ?

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