Oriole, Inc. operates three divisions, Weak, Average, and Strong. As it turns out, the Weak division...
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Oriole, 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 George, that his division earned money for the company. Following is the most recent financial analysis for each division: Sales revenue Variable expenses Contribution margin Direct expenses Allocated expenses Operating income Weak $126,000 56,600 69,400 30,300 70,000 $(30,900) Average Strong $452,500 $527,500 246,500 306,600 206,000 78,200 70,000 $57,800 220,900 114,100 70,000 $36,800 (a) Prepare a revised income statement showing the segment margin for each division. Allocated expense Allocated expense Direct costs Sales Contribution margin Operating income Variable expense Segment margin Operaemg mcome eTextbook and Media Save for Later $ $ Weak $ $ Average $ Strong Attempts: 0 of 3 used Submit Answer (b) By how much would total income change if the Weak division were dropped? Total income will eTextbook and Media Save for Later V by $ Attempts: 0 of 3 used Submit Answer (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? Average will report allocated expenses of $ eTextbook and Media Save for Later , resulting in an operating income operating loss of $ Attempts: 0 of 3 used Submit Answer Oriole, 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 George, that his division earned money for the company. Following is the most recent financial analysis for each division: Sales revenue Variable expenses Contribution margin Direct expenses Allocated expenses Operating income Weak $126,000 56,600 69,400 30,300 70,000 $(30,900) Average Strong $452,500 $527,500 246,500 306,600 206,000 78,200 70,000 $57,800 220,900 114,100 70,000 $36,800 (a) Prepare a revised income statement showing the segment margin for each division. Allocated expense Allocated expense Direct costs Sales Contribution margin Operating income Variable expense Segment margin Operaemg mcome eTextbook and Media Save for Later $ $ Weak $ $ Average $ Strong Attempts: 0 of 3 used Submit Answer (b) By how much would total income change if the Weak division were dropped? Total income will eTextbook and Media Save for Later V by $ Attempts: 0 of 3 used Submit Answer (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? Average will report allocated expenses of $ eTextbook and Media Save for Later , resulting in an operating income operating loss of $ Attempts: 0 of 3 used Submit Answer
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