Waterway Company has four operating divisions. During the first quarter of 2020, the company reported aggregate income from operations of $188,400 and the following divisional results. Division | III IV Sales $246,000 $197,000 $503,000 $444,000 Cost of goods sold 205,000 195,000 305,000 250,000 Selling and administrative expenses 71,600 63,000 60,000 52,000 Income (loss) from operations $ (30,600) $ (61,000) $138,000 $142,000 Analysis reveals the following percentages of variable costs in each division. IV Cost of goods sold 74 % 88% 78 % 76 % Selling and administrative expenses 37 61 50 59 Discontinuance of any division would save 50% of the fixed costs and expenses for that division. Top management is very concerned about the unprofitable divisions (I and II). Consensus is that one or both of the divisions should be discontinued.