70.2K

Verified Solution

Link Copied!

can anyone help me to solve this question?

P P7.5 .0 6), AN Khiw NV has four operating divisions. During the first quarter of 2020, the company reported aggregate income from operations of 213,000 and the following divisional results. Division I II III IV Sales 250,000 * 200,000 500,000 450,000 Cost of goods sold 200,000 192,000 300,000 250,000 Selling and administrative expenses 75,000 60,000 60,000 50,000 Income (loss) from operations (25,000) (52,000) 140,000 150,000 Analysis reveals the following percentages of variable costs in each division. TY 60 50 Cost of goods sold 70% 90% 80% 75% Selling and administrative expenses 40 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. a. I 80 Instructions a. Compute the contribution margin for Divisions I and II b. Prepare an incremental analysis concerning the possible discontinuance of (1) Division I and (2) Division II. What course of action do you recommend for each division? c. Prepare a columnar condensed income statement for Khiw, assuming Division II is eliminated. (Use the CVP format.) Division II's unavoidable fixed costs are allocated equally to the continuing divisions. d. Reconcile the total income from operations (213,000) with the total income from operations with out Division II. C. Incom

Answer & Explanation Solved by verified expert

See Answer