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Thornton Manufacturing Co. produces and sells specialized equipment used in the petroleum industry. The company is organized into three separate operating branches: Division A, which
Thornton Manufacturing Co. produces and sells specialized equipment used in the petroleum industry. The company is organized into three separate operating branches: Division A, which manufactures and sells heavy equipment; Division B, which manufactures and sells hand tools; and Division C, which makes and sells electric motors. Each division is housed in a separate manufacturing facility, Company headquarters is located in a separate buliding. In recent years. Division B has been operating at a net loss and is expected to continue to do so. Income statements for the three divisions for year 2 follow. Required a-1. Based on the preceding information, recommend whether to eliminate Division B a.2. Prepare companywide income statements before and after eliminating Division B. b. During year 2, Division 8 produced and sold 24,000 units of hand tools. Calculate the contribution to profit if sales and production increase to 35,000 units in year 3 . c. Suppose that Thornton could sublease Division B's manufacturing facility for $410,000, at a production and sales volume of 35,000 units. Calculate the contribution to profit of Division B
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