Lisa Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Wildhorse Company's...
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Lisa Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Wildhorse Company's six divisions. Lisa made the following presentation to Wildhorse'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 $25,500." The Other Percy Five Divisions Division Total Sales $1,665,000 $100,700 $1,765,700 Cost of goods sold 978,100 76,600 1,054,700 Gross profit 686,900 24,100 711,000 Operating expenses 528,100 49,600 577,700 Net income $158,800 $ (25,500 ) $133,300 In the Percy Division, cost of goods sold is $60,000 variable and $16,600 fixed, and operating expenses are $30,700 variable and $18,900 fixed. None of the Percy Division's fixed costs will be eliminated if the division is discontinued. Is Lisa right about eliminating the Percy Division? Prepare a schedule to support your answer. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net Income Increase Continue Eliminate (Decrease) Sales 2$ 24 Variable costs Cost of goods sold Operating expenses Total variable Contribution margin Fixed costs Cost of goods sold Operating expenses Total fixed Net income (loss) 24 24 Lisa is %24 %24 Lisa Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Wildhorse Company's six divisions. Lisa made the following presentation to Wildhorse'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 $25,500." The Other Percy Five Divisions Division Total Sales $1,665,000 $100,700 $1,765,700 Cost of goods sold 978,100 76,600 1,054,700 Gross profit 686,900 24,100 711,000 Operating expenses 528,100 49,600 577,700 Net income $158,800 $ (25,500 ) $133,300 In the Percy Division, cost of goods sold is $60,000 variable and $16,600 fixed, and operating expenses are $30,700 variable and $18,900 fixed. None of the Percy Division's fixed costs will be eliminated if the division is discontinued. Is Lisa right about eliminating the Percy Division? Prepare a schedule to support your answer. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Net Income Increase Continue Eliminate (Decrease) Sales 2$ 24 Variable costs Cost of goods sold Operating expenses Total variable Contribution margin Fixed costs Cost of goods sold Operating expenses Total fixed Net income (loss) 24 24 Lisa is %24 %24
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Related Book For
Accounting Principles
ISBN: 978-1118875056
12th edition
Authors: Jerry Weygandt, Paul Kimmel, Donald Kieso
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