Monty Company has four operating divisions. During the first quarter of 2017, the company reported aggregate income from operations of $218,700 and the following divisional results. Division I II III IV Sales $253,000 $195,000 $501,000 $447,000 Cost of goods sold 197,000 194,000 296,000 250,000 Selling and administrative expenses 69,300 62,000 61,000 48,000 Income (loss) from operations $ (13,300) $ (61,000) $144,000 $149,000 Analysis reveals the following percentages of variable costs in each division. I II III IV Cost of goods sold 72 % 89 % 79 % 76 % Selling and administrative expenses 40 57 52 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. Compute the contribution margin for Divisions I and II. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Division I Division II Contribution margin $ $ LINK TO TEXT Prepare an incremental analysis concerning the possible discontinuance of Division I. (Round answers to 0 decimal places, e.g. 1525. If amount decreases net income then enter the amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Continue Eliminate Net IncomeIncrease (Decrease) Contribution margin $ $ $ Fixed costs Cost of goods sold Selling and administrative Total fixed expenses Income (loss) from operations $ $ $ LINK TO TEXT Prepare an incremental analysis concerning the possible discontinuance of Division II. (Round answers to 0 decimal places, e.g. 1525. If amount decreases net income then enter the amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Continue Eliminate Net IncomeIncrease (Decrease) Contribution margin $ $ $ Fixed costs Cost of goods sold Selling and administrative Total fixed expenses Income (loss) from operations $ $ $ LINK TO TEXT What course of action do you recommend for each division? Division I EliminatedContinued Division II ContinuedEliminated
Monty Company has four operating divisions. During the first quarter of 2017, the company reported aggregate income from operations of $218,700 and the following divisional results. Division I II III IV Sales $253,000 $195,000 $501,000 $447,000 Cost of goods sold 197,000 194,000 296,000 250,000 Selling and administrative expenses 69,300 62,000 61,000 48,000 Income (loss) from operations $ (13,300) $ (61,000) $144,000 $149,000 Analysis reveals the following percentages of variable costs in each division. I II III IV Cost of goods sold 72 % 89 % 79 % 76 % Selling and administrative expenses 40 57 52 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. Compute the contribution margin for Divisions I and II. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Division I Division II Contribution margin $ $ LINK TO TEXT Prepare an incremental analysis concerning the possible discontinuance of Division I. (Round answers to 0 decimal places, e.g. 1525. If amount decreases net income then enter the amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Continue Eliminate Net IncomeIncrease (Decrease) Contribution margin $ $ $ Fixed costs Cost of goods sold Selling and administrative Total fixed expenses Income (loss) from operations $ $ $ LINK TO TEXT Prepare an incremental analysis concerning the possible discontinuance of Division II. (Round answers to 0 decimal places, e.g. 1525. If amount decreases net income then enter the amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Continue Eliminate Net IncomeIncrease (Decrease) Contribution margin $ $ $ Fixed costs Cost of goods sold Selling and administrative Total fixed expenses Income (loss) from operations $ $ $ LINK TO TEXT What course of action do you recommend for each division? Division I EliminatedContinued Division II ContinuedEliminated
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing
Section: Chapter Questions
Problem 11E: Xenold, Inc., manufactures and sells cooktops and ovens through three divisions: Home, Restaurant,...
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