Sheridan Manufacturing Company has four operating divisions. During the first quarter of 2022, the company reported aggregate income from operations of $154,900 and the following divisional results: Division 11 III IV Sales $505,800 $399,000 $308,900 $ 178,800 284,000 246,500 272,600 155,400 Cost of goods sold Selling and administrative expenses Income (loss) from operations 61,500 73,800 69,000 74,800 $160,300 $78,700 $(32,700) $(51,400) The analysis reveals the following percentages of variable costs in each division: 11 III IV 72% 88% 74% 92% Cost of goods sold Selling and administrative expenses 42 49 65 70 Discontinuance of any division would save 50% of the fixed costs and expenses for that 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 (III and IV). The consensus is that the company should discontinue one or both of these divisions Calculate the contribution margin for divisions II and IV. (Enter negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.s. (45).) Divisions III Divisions IV Contribution margin $ 62326 $ - 16528 e Textbook and Media Prepare an incremental analysis for the possible discontinuance of (1) division III and (2) division IV. (Round answers to 0 decimal places, e.g. 125. Enter all negative amounts using either a negative sign preceding the number e.g.-45 or parentheses e.s. (45). While alternate approaches are possible, irrelevant fixed costs should be included in both options when solving this problem.) (1) Division 11 Division III: Income Increase (Decrease) Keep Div. III Shut Div. III Contribution margin $ $ Fixed costs Totals $ $ (2) Division IV Income Increase (Decrease) Division IV: Keep Div. IV Shut Div. IV Contribution margin $ $ Fixed costs Totals $ $ $ What course of action do you recommend for each division? Division III should be Division IV should be eTextbook and Media Prepare a condensed income statement in columns for Sheridan Manufacturing, assuming division IV is eliminated. Use the CVP format. Division IV's unavoidable fixed costs are allocated equally to the continuing divisions(Enter loss using either a negative sign preceding the number c.8. -45 or parentheses e.g. (45). While alternate approaches are possible, irrelevant fixed costs should be included in both options when solving this problem.) SHERIDANMANUFACTURING COMPANY CVP Income Statement Divi Div II Div III Sales $ Sales Prepare a condensed income statement in columns for Sheridan Manufacturing, assuming division IV is eliminated. Use the CVP format. Division IV's unavoidable fixed costs are allocated equally to the continuing divisions. (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.3. (45). While alternate approaches are possible, irrelevant fixed costs should be included in both options when solving this problem.) SHERIDANMANUFACTURING COMPANY CVP Income Statement Divi Div 11 Div III Sales $ Sales $ $ $ Net income/Closs) Net income/loss) . e Textbook and Media Reconcile the total income from operations of $154,900 with the total income from operations without division IV. Income from operations with Division IV $ $ Incremental income from eliminating Division IV $ Income from operations without Division IV e Textbook and Media
