Wildhorse, Inc. operates three divisions, Weak, Average, and Strong. As it turns out, the Weak division has the lowest operating income, and the president wants to close it. "Survival of the fittest, I say!" was his response when the Weak division's manager, insisted Chris, that his division earned money for the company. Following is the most recent financial analysis for each division:

Weak Average Strong

Sales Revenue 126,900 450,000 527,600

Variable Expenses 57,000 246,000 300,500

Contribution Margin 69,900 204,400 227,100

Direct Expenses 30,600 77,800 113,200

Allocated Expenses 69,000 69,000 69,000

Operating Income (29,700) 57,200 44,900

Make a revised income statement showing the segment margin for each division.

Weak Average Strong

By how much would total income change if the Weak division were dropped?

Total income will

Based on the way allocated expenses are divided among the divisions, what do you think will happen to the Average division if the company continues to prepare financial statements in this way, assuming Weak was dropped?

If Weak is dropped, then Average will report allocated expenses of resulting in an of $ for the division