Cullumber Manufacturing Company has four operating divisions. During the first quarter of 2022, the company reported...

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Cullumber Manufacturing Company has four operating divisions. During the first quarter of 2022, the company reported aggregate income from operations of $187,700 and the following divisional results: Division III IV Sales $527,200 $403,200 $313,400 $179,700 Cost of goods sold 284,600 249,700 269,600 151,800 Selling and administrative expenses 63,800 76,900 65,600 73,800 Income (loss) from operations $178,800 $76,600 $(21,800) $(45,900) The analysis reveals the following percentages of variable costs in each division: II III IV Cost of goods sold 70% 90% 76% 92% Selling and administrative expenses 40 50 65 70 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 (III and IV). The consensus is that the company should discontinue one or both of these divisions. Calculate the contribution margin for divisions III and IV. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Divisions III Divisions IV Contribution margin $ $ eTextbook and Media Prepare an incremental analysis for the possible discontinuance of (1) division III and (2) division IV. (Round answers to O decimal places, e.g. 125. Enter all negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). While alternate approaches are possible, irrelevant fixed costs should be included in both options when solving this problem.) (1) Division III Division III: Contribution margin $ Fixed costs Keep Div. III Shut Div. III Income Increase (Decrease) $ Totals $ $ $ (2) Division IV Income Division IV: Keep Div. IV Shut Div. IV Increase (Decrease) Contribution margin $ $ Fixed costs Totals What course of action do you recommend for each division? Division III should be Division IV should be eTextbook and Media $ Prepare a condensed income statement in columns for Cullumber Manufacturing, assuming division IV is eliminated. Use the CVP format. Division IV's unavoidable fixed costs are allocated equally to the continuing divisions. (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). While alternate approaches are possible, irrelevant fixed costs should be included in both options when solving this problem.) +A $ Div I > eTextbook and Media $ CULLUMBERMANUFACTURING COMPANY CVP Income Statement +A Div II Div III $ CA $ Reconcile the total income from operations of $187,700 with the total income from operations without division IV. Income from operations with Division IV $ Incremental income from eliminating Division IV $ Income from operations without Division IV $ eTextbook and Media Cullumber Manufacturing Company has four operating divisions. During the first quarter of 2022, the company reported aggregate income from operations of $187,700 and the following divisional results: Division III IV Sales $527,200 $403,200 $313,400 $179,700 Cost of goods sold 284,600 249,700 269,600 151,800 Selling and administrative expenses 63,800 76,900 65,600 73,800 Income (loss) from operations $178,800 $76,600 $(21,800) $(45,900) The analysis reveals the following percentages of variable costs in each division: II III IV Cost of goods sold 70% 90% 76% 92% Selling and administrative expenses 40 50 65 70 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 (III and IV). The consensus is that the company should discontinue one or both of these divisions. Calculate the contribution margin for divisions III and IV. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Divisions III Divisions IV Contribution margin $ $ eTextbook and Media Prepare an incremental analysis for the possible discontinuance of (1) division III and (2) division IV. (Round answers to O decimal places, e.g. 125. Enter all negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). While alternate approaches are possible, irrelevant fixed costs should be included in both options when solving this problem.) (1) Division III Division III: Contribution margin $ Fixed costs Keep Div. III Shut Div. III Income Increase (Decrease) $ Totals $ $ $ (2) Division IV Income Division IV: Keep Div. IV Shut Div. IV Increase (Decrease) Contribution margin $ $ Fixed costs Totals What course of action do you recommend for each division? Division III should be Division IV should be eTextbook and Media $ Prepare a condensed income statement in columns for Cullumber Manufacturing, assuming division IV is eliminated. Use the CVP format. Division IV's unavoidable fixed costs are allocated equally to the continuing divisions. (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). While alternate approaches are possible, irrelevant fixed costs should be included in both options when solving this problem.) +A $ Div I > eTextbook and Media $ CULLUMBERMANUFACTURING COMPANY CVP Income Statement +A Div II Div III $ CA $ Reconcile the total income from operations of $187,700 with the total income from operations without division IV. Income from operations with Division IV $ Incremental income from eliminating Division IV $ Income from operations without Division IV $ eTextbook and Media

Answer rating: 100% (QA)

To analyze the profitability of the divisions and determine whether any should be discontinued we ne... View the full answer