a. Based on the way allocated expenses are divided among the divisions, what do you think will happen to the Average division if the company continues to prepare financial statements in this way, assuming Weak was dropped?

If weak is dropped then average will report allocated expenses of $____, resulting in an ____ of $_____ for the division

Ivanhoe, Inc. operates three divisions, Weak, Average, and Strong. As it turns out, the Weak division has the lowest operating income, and the president wants to close it. Survival of the fittest, I say!" was his response when the Weak division's manager, insisted Michael, that his division earned money for the company. Following is the most recent financial analysis for each division: Weak Average Strong Sales revenue $127,500 $446,500 $545,900 Variable expenses 54,900 245,300 307,100 Contribution margin 72,600 201,200 238,800 Direct expenses 39,800 80,000 112,100 Allocated expenses 67,600 67,600 67,600 Operating income $(34,800) $53,600 $59,100