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Swifty Company has four operating divisions. During the first quarter of 2020, the company reported aggregate income from operations of $194,000 and the following divisional
Swifty Company has four operating divisions. During the first quarter of 2020, the company reported aggregate income from operations of $194,000 and the following divisional results. Sales Cost of goods sold Selling and administrative expenses Income (loss) from operations $251,000 205,000 76,000 $(30,000) Division II III IV $195,000 $502,000 $446,000 189.000 302.000 251,000 63,000 60,000 54,000 $ (57,000) $140,000 $141,000 Analysis reveals the following percentages of variable costs in each division. II Cost of goods sold Selling and administrative expenses 68 % 39 90 % 57 79 % 49 IV 73 % 62 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. 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 eg. (45) Net Income Continue Eliminate Increase (Decrease) Contribution margin Foxed costs Cost of goods sold Selling and administrative Totalfoed expenses Income loss) from operations Prepare an incremental analysis concerning the possible discontinuance of Division 1 (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g (45) Continue Net Income Increase (Decrease Eliminate Contribution $ Fixed costs Cost of goods sold Selling and administrative Totalfoed expenses Income oss from operations $
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