Question 2 Modern Company has four divisions. The budgeted revenues and expenses for each division...
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Question 2 Modern Company has four divisions. The budgeted revenues and expenses for each division for 2021 follows: Division B D Sales $504,000 $948,000 $960,000 $1,240,000 Cost of goods sold 440.000 930,000 765.000 925.000 Selling & admin costs 96,000 202,500 144,000 210,000 Operating income (los) S(32,000) S(184,500) S51,000 $105,000 Further analysis of costs reveals the following percentages of variable costs in each division: A B C D Cost of goods sold 90% 80% 90% 85% Selling & admin costs 50% 50% 60% 60% Closing down any division would result in a savings of 40% of the fixed costs of that division. Required: 1. Calculate the increase or decrease in operating income if Modern Company closes division B using the below table: Item 2. What factors should the top management of Modern Company consider before making a decision
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