Blue and Green are both divisions in a large, multinational corporation. Each division operates independently....
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Blue and Green are both divisions in a large, multinational corporation. Each division operates independently. Managers are compensated based in part on the net income that their division is able to achieve Both divisions make and market the same products, but they operate in different geographic regions. As with many firms in the current time, both divisions face an uncertain operating environment and have been struggling to find ways to move forward given the new situation. Selected information for 2020 for the two divisions follows:
Division
Blue
Green
SP
$42
$45
Units produced
86,000
38,600
Units sold
85,000
35,400
Unit cost (variable costing)
$31
$28
Unit cost (absorption costing)
$36
$37
Break even point (in units)
6,125
4,320
DOL
2.45
2.77
NI
$423,400
$185,300
Which division do you believe is the most risky? It is not necessary to do additional computations. Assume the amounts provided are correct. State clearly which division is more risky and support your answer with the data provided. Use Breakeven analysis or SDS if necessary
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