The president of Eaglesway Incorporated attended a seminar about the contribution margin model and returned to her company full of

enthusiasm about it$.$ She requested that last year's traditional model income statement be revised, and she recelved the following

report:

The president was told that the fixed expenses of $$178,000$ included $$97,500$ that had been split evenly between divisions because

they were general corporate expenses. After looking at the statement, the president exclaimed, "I knew it$!$ Division Y is a drag on the

whole company. Close it down!"

Required:

a$.$ Evaluate the president's remark.

b$.$ Calculate what the company's net income would be if Division Y were closed down.

c$.$ What is the policy statement related to the allocation of fixed expenses?

Complete this question by entering your answers in the tabs below.

Evaluate the president's remark.