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Veronica Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Dunn Company's six divisions. Veronica made the following presentation to
Veronica Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Dunn Company's six divisions. Veronica made the following presentation to Dunn's board of directors and suggested the Percy Division be eliminated. "If the Percy Division is eliminated," she said, "our total profits would increase by $26.200 The Other Five Divisions Percy Division Total Sales $1,663,000 $100,100 $1,763,100 Cost of goods sold 978,600 76,800 1,055,400 Gross profit 684,400 23,300 707,700 Operating expenses Net income 526,000 49,500 575,500 $158,400 $ (26,200) $132,200 In the Percy Division, cost of goods sold is $59,300 variable and $17,500 fixed, and operating expenses are $31,400 variable and $18,100 fixed. None of the Percy Division's fixed costs will be eliminated if the division is discontinued. is Veronica right about eliminating the Percy Division? Prepare a schedule to support your answer. (Enter negative amounts using either a negative sign preceding the number eg-45 or parentheses eg (45)) Sales Variable costs Cost of goods sold Eliminate Continue $ Net Income Increase (Decrease)
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