Wildhorse Manufacturing Company has four operating divisions. During the first quarter of 2022, the company reported aggregate income from operations of $139,800 and the following divisional results:

		Division
		I		II		III		IV
Sales		$504,000		$393,000		$313,400		$175,700
Cost of goods sold		297,000		241,800		273,200		151,800
Selling and administrative expenses		67,400		74,400		66,800		73,900
Income (loss) from operations		$139,600		$76,800		$(26,600)		$(50,000)

The analysis reveals the following percentages of variable costs in each division:

		I			II			III			IV
Cost of goods sold		70%			92%			74%			92%
Selling and administrative expenses		39			50			65			70

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 (III and IV). The consensus is that the company should discontinue one or both of these divisions.

(b)

Prepare an incremental analysis for the possible discontinuance of (1) division III and (2) division IV. (Round answers to 0 decimal places, e.g. 125. Enter all negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). While alternate approaches are possible, irrelevant fixed costs should be included in both options when solving this problem.) (1) Division III

Division III:		Keep Div. III			Shut Div. III			Income Increase (Decrease)
Contribution margin		$enter a dollar amount			$enter a dollar amount			$enter a dollar amount
Fixed costs		enter a dollar amount			enter a dollar amount			enter a dollar amount
Totals		$enter a total amount			$enter a total amount			$enter a total amount

(2) Division IV

Division IV:		Keep Div. IV			Shut Div. IV			Income Increase (Decrease)
Contribution margin		$enter a dollar amount			$enter a dollar amount			$enter a dollar amount
Fixed costs		enter a dollar amount			enter a dollar amount			enter a dollar amount
Totals		$enter a total amount			$enter a total amount			$enter a total amount

What course of action do you recommend for each division?

Division III should be eliminated or continued

.

Division IV should be eliminated or continued

.