To: Dan Weimer From: Hector Alonso Subject: FY18 Results Hey, Dan: I just got out of a meeting with the CFO going over our preliminary final numbers for FYE 6/30/18.I swear I've never seen anyone looking at record sales and record profits be so furious.She's really worked up over the Mountain, Southwest, and Pacific divisions losing money (again), and she's about ready to burn down everything west of the Mississippi.She says we've been trying to get these things to turn a profit for a long time, and, quite frankly, she's right. Where she may not be right, though, is that increasing profits is as simple as shutting those divisions down. True enough, we get rid of all the variable costs for any division we close, and a lot of the fixed costs, too. What we don't get rid of is those four million of costs that are allocated down from corporate based on relative sales weight.Those costs are fixed and they aren't going anywhere.We close Pacific, and the other divisions just absorb that cost. So, here's what I need from you.For all our money-losing divisions, figure out what our contribution margins are.I've got from each division's accountants a rundown of how their expenses break down fixed/variable, and included it in the spreadsheet attached.From that, do an incremental analysis on what happens to company profit if we close the Mountain, Southwest, or Pacific divisions.Do each analysis separately. Finally, put together a pro forma income statement, showing what our company's income would have been (by division and in total) if we closed one or more of the divisions.This should only reflect us closing the divisions that would make us more profitable based on your incremental analysis.Remember, the allocated corporate fixed costs would have to be reallocated based on the new revenue numbers, and I've also attached the schedule of how we currently do it. When you have all that together, just write up a quick one or two paragraph summary of what you're recommending.Which division or divisions should be closed, and why.Also include any other factors we should consider or questions we should ask beyond just what's on the income statement before we set any plans in motion. My next meeting with the CFO is on Tuesday, November 6.So I need this by mi-morning on the 5th.Many thanks.