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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 $ 26,100.

The Other Five Divisions Percy Division Total
Sales $ 1,663,000 $ 100,900 $ 1,763,900
Cost of goods sold 977,300 76,800 1,054,100
Gross profit 685,700 24,100 709,800
Operating expenses 528,400 50,200 578,600
Net income $ 157,300 $ ( 26,100 ) $ 131,200

In the Percy Division, cost of goods sold is $ 59,500 variable and $ 17,300 fixed, and operating expenses are $ 31,000 variable and $ 19,200 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 a dollar amount $ enter a dollar amount $ enter a dollar amount
Variable costs
Cost of goods sold enter a dollar amount enter a dollar amount enter a dollar amount
Operating expenses enter a dollar amount enter a dollar amount enter a dollar amount
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 dollar amount enter a dollar amount enter a dollar amount
Fixed costs
Cost of goods sold enter a dollar amount enter a dollar amount enter a dollar amount
Operating expenses enter a dollar amount enter a dollar amount enter a dollar amount
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 dollar amount $ enter a dollar amount $ enter a dollar amount

Veronica is correct/incorrect

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