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Susan Wilson, a recent graduate of Lawn University's accounting program, evaluated the operating performance of Bramble Company's six divisions. Susan made the following presentation to
Susan Wilson, a recent graduate of Lawn University's accounting program, evaluated the operating performance of Bramble Company's six divisions. Susan made the following presentation to Bramble's board of directors and suggested the Erie division be eliminated. "If the Erie division is eliminated," she said, "our total profits would increase by $23,800. The Other Five Divisions Total $1,663,000 Sales Cost of goods sold Gross profit Operating expenses Net income 978,800 684,200 528,500 Erie Division $100,300 76,300 24,000 47,800 $(23,800) $1,763,300 1,055,100 708,200 576,300 $131,900 $155,700 In the Erie division, the cost of goods sold is $59,300 variable and $17,000 fixed, and operating expenses are $15,500 variable and $32,300 fixed. None of the Erie division's fixed costs will be eliminated if the division is discontinued. Is Susan right about eliminating the Erie Division? Prepare a schedule to support your answer. (If an amount reduces the net income then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000).) Net Income Increase (Decrease) Continue Eliminate ta $ $ $
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