Trump Forest Corporation operates two divisions, the Timber Division and the Consumer Division. The Timber Division manufactures and sells logs to paper manufacturers. The Consumer Division operates retail lumber mills which sell a variety of products in the do-it-yourself homeowner market. The company is considering disposing of the Consumer Division since it has been consistently unprofitable for a number of years. The income statements for the two divisions for the year ended December 31, 2019 are presented below:

		Timber Division					Consumer Division						Total
Sales			$	1,500,000				$	500,000					$	2,000,000
Cost of goods sold				900,000					350,000						1,250,000
Gross profit				600,000					150,000						750,000
Selling & administrative expenses				250,000					180,000						430,000
Net income			$	350,000				$	(30,000	)				$	320,000

In the Consumer Division, 70% of the cost of goods sold are variable costs and 35% of selling and administrative expenses are variable costs. The management of the company feels it can save $45,000 of fixed cost of goods sold and $50,000 of fixed selling expenses if it discontinues operation of the Consumer Division.

Current Attempt in Progress Trump Forest Corporation operates two divisions, the Timber Division and the Consumer Division. The Timber Division manufactures and sells logs to paper manufacturers. The Consumer Division operates retail lumber mills which sell a variety of products in the do-it- yourself homeowner market. The company is considering disposing of the Consumer Division since it has been consistently unprofitable for a number of years. The income statements for the two divisions for the year ended December 31, 2019 are presented below: Timber Division Consumer Division Total Sales $ 1,500,000 $ 500,000 $ 2,000,000 Cost of goods sold 900,000 350,000 1,250,000 Gross profit 600,000 150,000 750,000 Selling & administrative expenses 250,000 180,000 430,000 Net income $ 350,000 $ (30,000) $ 320,000 In the Consumer Division, 70% of the cost of goods sold are variable costs and 35% of selling and administrative expenses are variable costs. The management of the company feels it can save $45,000 of fixed cost of goods sold and $50,000 of fixed selling expenses if it discontinues operation of the Consumer Division. 500000 $ 0 $ -500000 (penses oods Sold 210000 0 210000 d Administrative Expense 000 45000 0 45000 on Margin 245000 0 -245000 1.0 p!! nses oods Sold 140000 80000 60000 d Administrative Expense v 135000 85000 50000 ne/(Loss) $ -30000 $ - 165000 $ 135000 The company should continue the Consumer Division. e Textbook and Media