Prepare an incremental analysis concerning the possible discontinuance of Division ll, Division lll , and Division lv.

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Crane Company has four operating divisions. During the first quarter of 2025, the company reported aggregate income from operations of $210,600 and the following divisional results. Sales Cost of goods sold Selling and administrative expenses Income (loss) from operations || $245,000 $197,000 $504,000 200,000 192,000 301,000 72,400 63,000 58,000 $ (27,400) $ (58,000) $145,000 Analysis reveals the following percentages of variable costs in each division. I Cost of goods sold 73 % Selling and administrative expenses 39 II Division 91 % 59 III 82 % 50 IV 75 % 61 IV $450,000 249,000 50,000 $151,000 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. Crane Company has four operating divisions. During the first quarter of 2025, the company reported aggregate income from operations of $210,600 and the following divisional results. Sales Cost of goods sold Selling and administrative expenses Income (loss) from operations || $245,000 $197,000 $504,000 200,000 192,000 301,000 72,400 63,000 58,000 $ (27,400) $ (58,000) $145,000 Analysis reveals the following percentages of variable costs in each division. I Cost of goods sold 73 % Selling and administrative expenses 39 II Division 91 % 59 III 82 % 50 IV 75 % 61 IV $450,000 249,000 50,000 $151,000 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.

Answer rating: 100% (QA)

1 Calculation of Variable portion of Cost of Goods sold and Selling and administrativ... View the full answer