Crane, 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 divisions manager, insisted Paul, that his division earned money for the company. Following is the most recent financial analysis for each division:

		Weak			Average		Strong
Sales revenue		$ 126,600			$ 451,000		$ 545,600
Variable expenses		54,900			246,200		306,800
Contribution margin		71,700			204,800		238,800
Direct expenses		39,000			79,300		110,400
Allocated expenses		69,400			69,400		69,400
Operating income		$( 36,700)			$ 56,100		$ 59,000

(a)

Prepare a revised income statement showing the segment margin for each division.

		Weak		Average		Strong		Total
select an income statement item Segment marginDirect costsAllocated expenseSalesOperating incomeVariable expenseContribution margin		$ enter a dollar amount		$ enter a dollar amount		$ enter a dollar amount		$ enter a dollar amount
select an income statement item Segment marginDirect expenseContribution marginOperating incomeSalesAllocated expenseVariable expense		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
select a summarizing line for the first part SalesOperating incomeAllocated expenseDirect expenseVariable expenseSegment marginContribution margin		enter a total amount for the first part		enter a total amount for the first part		enter a total amount for the first part		enter a total amount for the first part
select an income statement item Variable expenseContribution marginOperating incomeDirect expenseSalesSegment marginAllocated expense		enter a dollar amount		enter a dollar amount		enter a dollar amount		enter a dollar amount
select a summarizing line for the second part Direct expenseAllocated expenseVariable expenseSalesContribution marginSegment marginOperating income		$ enter a total amount for the second part		$ enter a total amount for the second part		$ enter a total amount for the second part		enter a total amount for the second part
select an income statement item Direct expenseSalesOperating incomeContribution marginAllocated expenseSegment marginVariable expense								enter a dollar amount
select a closing name for this statement Segment marginDirect expenseContribution marginSalesAllocated expenseOperating incomeVariable expense								$ enter a total amount for this statement

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(b)

By how much would total income change if the Weak division were dropped?

Total income will select an option increasedecrease by $ enter a dollar amount .

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(c)

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 $ enter a dollar amount , resulting in an select an option operating incomeoperating loss of $ enter a dollar amount for the division.