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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 $26,600." Sales Cost of goods sold Gross profit Operating expenses Net income The Other Five Divisions $1,664,000 Sales 978,500 tA 685,500 $ 527,500 $158,000 Percy Division $100,500 76,700 23,800 50,400 $(26,600 ) Continue Total In the Percy Division, cost of goods sold is $59,400 variable and $17,300 fixed, and operating expenses are $30,100 variable and $20,300 fixed. None of the Percy Division's fixed costs will be eliminated if the division is discontinued. $1,764,500 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).) tA 1,055,200 709,300 577,900 $131,400 Eliminate LA Net Income Increase (Decrease)
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