Question 5: (4 Points) B1,C2,C3 Sand Canyon Services has two divisions, Basic Web Pages and Custom Web Pages. Ricky, manager of Custom Web Pages, wants to find out why Custom Web Pages is not profitable. He has prepared the report that appear below: Basic Web Pages Custom Web Pages Total Service Revenue 200,000 150.000 350,000 Variable Costs 77,000 120,000 197,000 Contribution Margin 153,000 48,000 105,000 Fixed Costs Net Income 123,000 16,000 107,000 30,000 32,000 (2.000) Ricky, decided to eliminate the Custom Web Pages division because of his recurring losses during the previous years, do you agree with Ricky's decision? and why? If you know that 50% the fixed costs will be allocated to Basic Web Pages division. Hint: Prepare income statement after eliminating Custom Web Pages division. Answer Basie Web Pages Total Service Revenue Variable Costs Contribution Margin Fixed Costs Net Income