Helen Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Ivanhoe Company's...

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Helen Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Ivanhoe Company's six divisions. Helen made the following presentation to Ivanhoe's board of directors and suggested the Percy Division be eliminated. "If the Percy Division is eliminated, she said, our total profits would increase by $25,900." The Other Five Divisions Percy Division Total Sales $1,665,000 $100,600 $1,765,600 Cost of goods sold 978,500 76,600 1,055,100 Gross profit 686,500 24,000 710,500 Operating expenses 526,900 49,900 576,800 Net income $159,600 $ (25,900 ) $133,700 In the Percy Division, cost of goods sold is $59,200 variable and $17,400 fixed, and operating expenses are $30,600 variable and $19,300 fixed. None of the Percy Division's fixed costs will be eliminated if the division is discontinued. Is Helen right about eliminating the Percy Division? Prepare a schedule to support your answer. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) 20 Exercises Question 8 of 9 Variable costs Cost of goods sold 59200 i 0 Operating expenses 30600 i Total variable 89800 2.48/2.78 E Contribution margin 10800 -10800 Fixed costs Cost of goods sold 17400 i 17400 i 0 Operating expenses 19300 i 19300 i Total fixed 36700 i 36700 0 Net income (loss) -25900 $ -36700 $ -10800 Helen is incorrect Helen Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Ivanhoe Company's six divisions. Helen made the following presentation to Ivanhoe's board of directors and suggested the Percy Division be eliminated. "If the Percy Division is eliminated, she said, our total profits would increase by $25,900." The Other Five Divisions Percy Division Total Sales $1,665,000 $100,600 $1,765,600 Cost of goods sold 978,500 76,600 1,055,100 Gross profit 686,500 24,000 710,500 Operating expenses 526,900 49,900 576,800 Net income $159,600 $ (25,900 ) $133,700 In the Percy Division, cost of goods sold is $59,200 variable and $17,400 fixed, and operating expenses are $30,600 variable and $19,300 fixed. None of the Percy Division's fixed costs will be eliminated if the division is discontinued. Is Helen right about eliminating the Percy Division? Prepare a schedule to support your answer. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) 20 Exercises Question 8 of 9 Variable costs Cost of goods sold 59200 i 0 Operating expenses 30600 i Total variable 89800 2.48/2.78 E Contribution margin 10800 -10800 Fixed costs Cost of goods sold 17400 i 17400 i 0 Operating expenses 19300 i 19300 i Total fixed 36700 i 36700 0 Net income (loss) -25900 $ -36700 $ -10800 Helen is incorrect