FlyWiz, Inc., is a small manufacturer of professional fishing equipment. The company has two divisions: the Rod Division and the Reel Division. Data for the month of January are shown on the following page.

Nick Fulbright, the company€™s chief financial officer since January 1 of the current year, wants to close the unprofitable Rod Division. He believes that doing so will benefit FlyWiz and benefit him, given that his end-of-year bonus is to be based on the company€™s overall operating income. In a recent interview, Fulbright summarized his business philosophy as follows: €œA company is only as strong as its least profitable segment. As long as I€™m at the financial helm, only the strongest shall survive at FlyWiz.€

Instructions
a. Had the Rod Division been closed on January 1, what would the company€™s operating income for the month have been?
b. After learning about Fulbright€™s business philosophy, the Rod Division€™s director of marketing made the following statement: €œNick Fulbright may understand numbers, but he doesn€™t understand the complementary relationship between rods and reels, nor the seasonal nature of our business.€ What did the director of marketing mean by this statement? How might such information influence Fulbright€™s assessment of the company€™s Rod Division?
c. By how much would the Rod Division€™s monthly sales have to increase for it to generate a positive responsibility margin of $4,000 in any given month? Show all of yourcomputations.

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Profit Centers Reel Rod Company Division Division Entire Sales Variable costs2 Contribution margin Traceable fixed costs. Division responsibility margin Common fixed costs Monthly operating income . $64,000 $26,000 $38,000 13,000 16,000 29,000 $35,000 $13,000 $22,000 27,000 17,000 10,000 8,000 $(4,000) $12,000 3,000 5,000 . .