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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 Dunn's
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 $26,100." Sales Cost of goods sold Gross profit Operating expenses Net income The Other Five Divisions $1.665,000 978,300 686,700 526,800 $159.900 Percy Division $100.100 76,000 24.100 50.200 $ (26,100) Total $1,765,100 1,054,300 710,800 577,000 $133,800 In the Percy Division, cost of goods sold is $59.000 variable and $17.000 fixed and operating expenses are $29.100 variable and $21,100 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 e.g. -45 or parentheses eg: (45).) Net Income Increase (Decrease) Continue Eliminate Sales $ $ $ Variable costs Cost of goods sold Operating expenses Total variable Contribution margin Fixed costs Cost of goods sold Operating expenses Total fixed Net income (loss) $ $ Veronica is
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