Veronica Mars, a recent graduate of Bells accounting program, evaluated the operating performance of Pharoah Companys six divisions. Veronica made the following presentation to Pharoahs board of directors and suggested the Percy Division be eliminated. If the Percy Division is eliminated, she said, our total profits would increase by $27,100.

		The Other Five Divisions		Percy Division			Total
Sales		$1,665,000		$100,100			$1,765,100
Cost of goods sold		978,700		76,700			1,055,400
Gross profit		686,300		23,400			709,700
Operating expenses		528,700		50,500			579,200
Net income		$157,600		$ (27,100	)		$130,500

In the Percy Division, cost of goods sold is $60,100 variable and $16,600 fixed, and operating expenses are $30,400 variable and $20,100 fixed. None of the Percy Divisions 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 e.g. -45 or parentheses e.g. (45).)

		Continue		Eliminate		Net Income Increase (Decrease)
Sales		$enter sales in dollars		$enter sales in dollars		$enter sales in dollars
Variable costs
Cost of goods sold		enter Cost of goods sold in dollars		enter Cost of goods sold in dollars		enter Cost of goods sold in dollars
Operating expenses		enter Operating expenses in dollars		enter Operating expenses in dollars		enter Operating expenses in dollars
Total variable		enter a total of the two previous amounts		enter a total of the two previous amounts		enter a total of the two previous amounts
Contribution margin		enter a total amount for the first part		enter a total amount for the first part		enter a total amount for the first part
Fixed costs
Cost of goods sold		enter Cost of goods sold in dollars		enter Cost of goods sold in dollars		enter Cost of goods sold in dollars
Operating expenses		enter Operating expenses in dollars		enter Operating expenses in dollars		enter Operating expenses in dollars
Total fixed		enter a total of the two previous amounts		enter a total of the two previous amounts		enter a total of the two previous amounts
Net income (loss)		$enter a total net income or loss amount		$enter a total net income or loss amount		$enter a total net income or loss amount

Veronica is select an option correctincorrect