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Linda Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Cullumber Company's six divisions. Linda made the following presentation to Cullumber'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 $26,100." The Other Percy Five Divisions Division Total Sales $1,663,000 $100,900 $1,763,900 Cost of goods sold 977,300 76,800 1,054,100 Gross profit 685,700 24,100 709,800 Operating expenses 528,400 50,200 578,600 Net income $157,300 $ (26,100 ) $131,200 In the Percy Division, cost of goods sold is $59,500 variable and $17,300 fixed, and operating expenses are $31,000 variable and $19,200 fixed. None of the Percy Division's fixed costs will be eliminated if the division is discontinued. Is Linda 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).) Net Income Increase Continue Eliminate (Decrease) 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) $ 2$ $ Linda is

Linda Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Cullumber Company's six divisions. Linda made the following presentation to Cullumber'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 $26,100." The Other Percy Five Divisions Division Total Sales $1,663,000 $100,900 $1,763,900 Cost of goods sold 977,300 76,800 1,054,100 Gross profit 685,700 24,100 709,800 Operating expenses 528,400 50,200 578,600 Net income $157,300 $ (26,100 ) $131,200 In the Percy Division, cost of goods sold is $59,500 variable and $17,300 fixed, and operating expenses are $31,000 variable and $19,200 fixed. None of the Percy Division's fixed costs will be eliminated if the division is discontinued. Is Linda 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).) Net Income Increase Continue Eliminate (Decrease) 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) $ 2$ $ Linda is

Financial And Managerial Accounting
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter24: Evaluating Decentralized Operations
Section: Chapter Questions
Problem 3CMA
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Linda Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Cullumber Company's six divisions. Linda made the following presentation to Cullumber'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 $26,100." The Other Percy Division Five Divisions Total Sales $1,663,000 $100,900 $1,763,900 Cost of goods sold 977,300 76,800 1,054,100 Gross profit 685,700 24,100 709,800 Operating expenses 528,400 50,200 578,600 Net income $157,300 $ (26,100 ) $131,200 In the Percy Division, cost of goods sold is $59,500 variable and $17,300 fixed, and operating expenses are $31,000 variable and $19,200 fixed. None of the Percy Division's fixed costs will be eliminated if the division is discontinued. Is Linda right about eliminating the Percy Division? Prepare a schedule to support your answer. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net Income Increase Continue Eliminate (Decrease) Sales Variable costs Cost of goods sold Operating expenses Total variable Contribution margin Fixed costs Cost of goods sold Operating expenses Total fixed Net income (loss) 2$ Linda is
Transcribed Image Text:Linda Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Cullumber Company's six divisions. Linda made the following presentation to Cullumber'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 $26,100." The Other Percy Division Five Divisions Total Sales $1,663,000 $100,900 $1,763,900 Cost of goods sold 977,300 76,800 1,054,100 Gross profit 685,700 24,100 709,800 Operating expenses 528,400 50,200 578,600 Net income $157,300 $ (26,100 ) $131,200 In the Percy Division, cost of goods sold is $59,500 variable and $17,300 fixed, and operating expenses are $31,000 variable and $19,200 fixed. None of the Percy Division's fixed costs will be eliminated if the division is discontinued. Is Linda right about eliminating the Percy Division? Prepare a schedule to support your answer. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net Income Increase Continue Eliminate (Decrease) Sales Variable costs Cost of goods sold Operating expenses Total variable Contribution margin Fixed costs Cost of goods sold Operating expenses Total fixed Net income (loss) 2$ Linda is
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