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Veronica Mars, a recent graduate of Bells accounting program, evaluated the operating performance of Dunn Companys six divisions. Veronica made the following presentation to Dunns

Veronica Mars, a recent graduate of Bells accounting program, evaluated the operating performance of Dunn Companys six divisions. Veronica made the following presentation to Dunns board of directors and suggested the Percy Division be eliminated. If the Percy Division is eliminated, she said, our total profits would increase by $26,900.

The Other Five Divisions Percy Division Total
Sales $1,665,000 $100,600 $1,765,600
Cost of goods sold 978,700 77,000 1,055,700
Gross profit 686,300 23,600 709,900
Operating expenses 527,200 50,500 577,700
Net income $159,100 $ (26,900 ) $132,200

In the Percy Division, cost of goods sold is $59,200 variable and $17,800 fixed, and operating expenses are $31,600 variable and $18,900 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 the cost of goods sold in dollars enter the cost of goods sold in dollars enter the 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 subtotal of the two previous amounts enter a subtotal of the two previous amounts enter a subtotal of the two previous amounts
Contribution margin enter contribution margin in dollars enter contribution margin in dollars enter contribution margin in dollars
Fixed costs
Cost of goods sold enter the cost of goods sold in dollars enter the cost of goods sold in dollars enter the 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 subtotal of the two previous amounts enter a subtotal of the two previous amounts enter a subtotal of the two previous amounts
Net income (loss) $enter net income or loss in dollars $enter net income or loss in dollars $enter net income or loss in dollars

Veronica is select an option incorrectcorrect

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