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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. The Other Five Divisions Percy Division Total Sales Cost of goods sold $1,664,000 $100,000 978,000 76,900 686,000 23,100 526,300 49,700 $159,700 $(26,600) $1,764,000 1,054,900 709,100 Gross profit Operating expenses 576,000 $133,100 Net income In the Percy Division, cost of goods sold is 560,800 variable and $16,100 fixed, and operating expenses are $31,600 variable and $18,100 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 numberes.-45 or parentheses es (451) 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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