60.1K

Verified Solution

Link Copied!

please make visible thank you.

Susan Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Sunland Company's six divisions. Susan made the following presentation to Sunland'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 $27,000: The Other Five Divisions $1,665,000 Percy Division Total Sales $100,000 $1,765,000 978,300 76,600 1,054.900 686,700 23,400 710,100 Cost of goods sold Gross profit Operating expenses Net income 528,100 50,400 578,500 $158,600 $ 27,000) $131,600 In the Percy Division cost of goods sold is $60,100 variable and $16,500 fixed, and operating expenses are $29,200 variable and $21.200 fixed. None of the Percy Division's fixed costs will be eliminated if the division is discontinued Is Susan 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.3. -45 or parentheses 2.3- (45).) Net Income Increase (Decrease) Continue Eliminate Sales $ 100100 0 100100 Variable costs Cost of goods sold 60000 60000 Operating expenses 30800 o 30800 Total variable 90000 9800 Contribution margin 9300 9300 Fixed costs Cost of goods sold 16900 16900 . Operating expenses 19800 19600 0 Totalfixed 36500 36500 Net Income (los) 27200 $ 36500 9300 Susan is incorrect

Answer & Explanation Solved by verified expert

See Answer