Sheridan Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Dunn Company's...
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Sheridan Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Dunn Company's six divisions. Sheridan made the following presentation to Dunn'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 $26.400. Sales Cost of goods sold Gross profit Operating expenses Net income The Other Five Divisions $1,663,000 977,200 685,800 528,500 $157,300 Percy Division $100,400 77,000 23,400 49,800 $(26,400) Total $1,763,400 1,054,200 709,200 578,300 $130,900 In the Percy Division, cost of goods sold is $60,600 variable and $16,400 fixed, and operating expenses are $30,900 variable and $18,900 fixed. None of the Percy Division's fixed costs will be eliminated if the division is discontinued. In the Percy Division, cost of goods sold is $60,600 variable and $16,400 fixed, and operating expenses are $30,900 variable and $18,900 fixed. None of the Percy Division's fixed costs will be eliminated if the division is discontinued. Is Sheridan right about eliminating the Percy Division? Prepare a schedule to support your answer. (Enter negative amounts using either negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Sales Variable costs Cost of goods sold Operating expenses Total variable Contribution margin Fixed costs Cost of goods sold Operating expenses Total fixed Net income (loss) $ $ Eliminate (Decrease) -100,400 Sheridan Mars, a recent graduate of Bell's accounting program, evaluated the operating performance of Dunn Company's six divisions. Sheridan made the following presentation to Dunn'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 $26.400. Sales Cost of goods sold Gross profit Operating expenses Net income The Other Five Divisions $1,663,000 977,200 685,800 528,500 $157,300 Percy Division $100,400 77,000 23,400 49,800 $(26,400) Total $1,763,400 1,054,200 709,200 578,300 $130,900 In the Percy Division, cost of goods sold is $60,600 variable and $16,400 fixed, and operating expenses are $30,900 variable and $18,900 fixed. None of the Percy Division's fixed costs will be eliminated if the division is discontinued. In the Percy Division, cost of goods sold is $60,600 variable and $16,400 fixed, and operating expenses are $30,900 variable and $18,900 fixed. None of the Percy Division's fixed costs will be eliminated if the division is discontinued. Is Sheridan right about eliminating the Percy Division? Prepare a schedule to support your answer. (Enter negative amounts using either negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Sales Variable costs Cost of goods sold Operating expenses Total variable Contribution margin Fixed costs Cost of goods sold Operating expenses Total fixed Net income (loss) $ $ Eliminate (Decrease) -100,400
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Related Book For
Accounting Principles
ISBN: 978-1118875056
12th edition
Authors: Jerry Weygandt, Paul Kimmel, Donald Kieso
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