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Susan Wilson, a recent graduate of Bell's accounting program, evaluated the operating performance of Sunland Company's six divisions. Susan made the following presentation to Sunland's
Susan Wilson, a recent graduate of Bell's accounting program, evaluated the operating performance of Sunland Company's six divisions. Susan made the following presentation to Sunland's board of directors and suggested the Percy Division be eliminated. "If the Percy Division is eliminated," she said, "our total profits would increase by $27,000." The Other Percy Total Five Divisions Division Sales $1,665,000 $100,000 $1,765,000 Cost of goods sold 978,300 76,600 1,054,900 710,100 Gross profit 686,700 23,400 578,500 Operating expenses 528,100 50,400 Net income $158,600 $(27,000) $131,600 In the Percy Division, cost of goods sold is $60,100 variable and $16,500 fixed, and operating expenses are $29,200 variable and $21,200 fixed. None of the Percy Division's fixed costs will be eliminated if the division is discontinued Is Susan 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).) Net Income Increase Continue Eliminate (Decrease) Sales Variable costs Cost of goods sold Operating expenses Total variable Contribution margin Fixed costs Cost of goods sold Operating expenses Total fixed Net income (loss) Susan correct incorrect tA
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